Pay Yourself Last


When starting a business, the hardest thing to do is acquire customers. The next hardest thing is to become profitable. Then finally it is very difficult to re-invest that profit back into the business to continue growing your customer base. The best way to gain more and more customers is to re-invest your profits. This money that is being invested needs to go into what originally brought customers in as well as new avenues of customer acquisition such as new products or services.

Companies can be destroyed when initial profits start coming in and people begin thinking that the money belongs in their pockets. Additional money does not belong in your pocket because if you only match your initial investment into the business there is no scalability to that. You are trying take on larger forces with the same, small level artillery if you line your pockets instead of re-investing. Invest in new products, more labor or more inventory.

Literally pay yourself last. The time to pay yourself is after you have paid your labor, all your overhead, stocked up on inventory, invested in new ideas and then if you still have a good amount of cash on hand you can pay yourself. Most companies do not make it to this point. Especially not within the first year or two. Money is what gives you the ability to take out your competitors and grow. Don’t be so quick to grab at money made. Be quick to figure out how that money can be used to innovate! That is what initial capital and profit is for.