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The Kelly Roach Show
963. The Owner’s Draw Dilemma: Why You Need To Start Paying Yourself More
Oct 19, 2023
Kelly challenges the conventional wisdom of minimal owner's draw and compensation, emphasizing the link between financial security and mental health. Underpaying yourself can lead to financial stress, affect your ability to lead effectively, and distort true profitability. Paying yourself what you're worth helps drive growth and make informed decisions. The podcast also discusses maintaining work-life balance and building scalable businesses.
23:09
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Quick takeaways
- Paying oneself a reasonable salary is crucial for mental and financial well-being, as underpaying oneself and relying solely on dividends can lead to a mental health crisis and financial instability at home.
- Underpaying oneself can greatly reduce the ability to negotiate and achieve the desired sale price when selling a business, as potential buyers evaluate the continuity of profits and the cost to replace the owner's role, highlighting the importance of accurately compensating oneself for the job performed.
Deep dives
The Importance of Proper Owner's Compensation
Paying oneself a reasonable salary is crucial for mental and financial well-being. Underpaying oneself and relying solely on dividends can lead to a mental health crisis, especially for breadwinners with financial responsibilities. It is important to be on the payroll for an amount that allows for comfortable living, saving, investing, and supporting one's family. By doing so, business owners can ensure stability and reduce stress during challenging times.
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