Owner Pay?

Discussion in 'Business Operations' started by RwADesigner, Mar 9, 2003.

  1. RwADesigner

    RwADesigner LawnSite Member
    Posts: 107

    This is our first full year of operation and we have noticed a definate growth in our business. We have however ran into problems when it comes time to pay ourselves. There is two of us, owners that is, and after we pay our overhead(truck/phone/ads/insurance/etc.) and workers, there have been times, more than not, that we havent been able to pay ourselves. Is this expected in a new business....I can understand how a new business is expensive and hard to start..but I beleive if you cant pay yourself..then what is the use. Jobs are just now starting to come in at regular pace. I am wondering have any of you ran into a problem of not having money in bank to pay yourself after everything else is paid...or do you take out 30 day loan to cover your pay....any advice on this matter is good advice.

    thank you
     
  2. Mike Bradbury

    Mike Bradbury LawnSite Senior Member
    Posts: 493

    Hell yes, that's the way it is for almost any startup. Very rare to hit it running. The normal guideline for most business is you should be able to pay yourself within 6 months. With a service business it shouldn't take that long.
     
  3. Mike Bradbury

    Mike Bradbury LawnSite Senior Member
    Posts: 493

    is all the equipment you're buying the first year. I barely payed myself anything last year, first year, but got a bunch of equipment that I need.
     
  4. John Allin

    John Allin LawnSite Bronze Member
    Posts: 1,489

    Sometimes it can take a year or two in order to generate enough cash to sustain a viable salary for the self employed individual. Alot of that is because the Owner is pouring money back into the business because they are undercapitalized at the beginning. That's the biggest problem with any start-up and seems to be inherent in our industry. The barriers to entry are low, and most landscape startups do it on a shoe string.

    If you know how to capitalize the business at the start, you can have a salary right away - however, this can be difficult if you don't have any real collateral to pledge.

    A more indepth discussion of this topic can be found by going to the following thread:

    http://www.lawnsite.com/showthread.php?threadid=36053
     
  5. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    I seem to remember when we first started out (9 years ago), I didn't pay myself anything the first year or so. I lived on savings. And whatever money was left over went back in to the business.
     
  6. lsylvain

    lsylvain LawnSite Senior Member
    Posts: 777

    3 words, part time job. What I ended up doing was broke out the old credit cards. Used the credit cards to cover biz expenses so I could pay myself the first year. Then the second year I had enough to pay off the cards. I don't recomend this if you have any doubts about your #1 will power to not go crazy, and #2 your ability to pay them off fast #3 your ability to handle the stress of having tons of short term debt. I went through a pile of tums a day, for a while.

    It has all work out though.
     
  7. adrianvbarrera

    adrianvbarrera LawnSite Member
    Posts: 163

    I don't get it.....lawnservice is a "SERVICE" business. Service businesses should start compensating you pretty quick.

    Maybe you guys are doing something wrong.

    Adrian
     
  8. GraZZmaZter

    GraZZmaZter LawnSite Senior Member
    Posts: 740

    I agree that it takes a while to start giving yourself a steady paycheck.

    Keep tredging forward and making progress. The time will come.
     
  9. adrianvbarrera

    adrianvbarrera LawnSite Member
    Posts: 163

    Yes Mazter,

    I can see where lack of a "steady" paycheck might be expected.

    But some people here have stated that they get a parttime job elsewhere.

    My thoughts are if you have the time to work at a parttime job elsewhere then you need to get more accounts. You need to work in your "element".

    I would be discouraged, if the guy that I pay over a $1000 a year to maintain my lawn, was also the grocery sacker at the place where I get my groceries.


    just my thoughts.

    Adrian
     
  10. GraZZmaZter

    GraZZmaZter LawnSite Senior Member
    Posts: 740

    Yes i agree that one should stay within their element, in order to be happy.

    I wouldn't be discouraged if i seen my lawn guy bagging groceries. That simply shows initiative.
     

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