The $100 MBA Show
MBA1833 Must Read: Simple Numbers by Greg Crabtree
Jul 19, 2021
Greg Crabtree, a notable author known for his straightforward approach to business finance, shares insights from his book 'Simple Numbers'. He emphasizes the importance of setting a fair salary for business owners, linking it to sustainable financial practices. The discussion covers crucial concepts like profitability, company valuation, and the relevance of salary management. Crabtree's no-nonsense guidance helps entrepreneurs tackle their financial fears and encourages them to confidently embrace their business finances for growth.
17:25
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Quick takeaways
- Setting a fair market rate for the founder's salary is vital for accurate financial assessments and future investment opportunities.
- Achieving a minimum of 10% profitability is essential for financial stability, guiding businesses in making informed growth decisions.
Deep dives
Understanding Salary as a Founder
Setting an appropriate market rate for the founder’s salary is crucial for the financial health of a business. Many entrepreneurs underestimate their worth and pay themselves less, which can distort the company’s financial records and affect future investment opportunities. The author emphasizes that founders should either pay themselves a fair salary or formalize their unpaid contributions through convertible notes to ensure their efforts are recognized in financial assessments. This approach helps ensure that profitability figures accurately reflect the cost of replacing the founder in the future.
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