Questions

How do I determine a salary number as a Founder?

As the founder of a potential 1.2M annual revenue project, I realize that the least I take the more my company has to spend, that being said, I want to be rewarded for my work and have the ability to splurge into ventures I am interested in, as an interested angel investor.

4answers

If you're bootstrapping, pay yourself less and re-invest in the company.

If you've raised money, then pay yourself average salary as you aren't subsidizing and getting more stock (for the $$) as an investor would - so once you raised, then it's a shared risk - don't make the financial subsidy a thing you take on.

I see this happen so many times where venture funded founders pay themselves little (ex: $40K / year) to look good, but the truth is you should be making $75K and instead you don't have the financial resources to a) pay off personal debt, b) hire help to be able to have more time to work, c) enjoy life with your partner/family and in turn burn those relationships.

Don't make that mistake if you have financial partners as investors. Be fair, but don't take a financial loss every month to save face.


Answered 6 years ago

Read the answer that Dan Martell wrote. Now go read it again. [While I'm waiting....] Now go read it one more time. That's the most honest and legitimate way to handle your salary.

Please don't make the mistake of having 7 co-founders who all want $60k out of the seed round you want to raise. That's complete bullshit. And I'm not entirely sure why I am seeing it so much in pitches these days.

Invest in your success early by sacrificing early (if possible) BUT be smart about paying yourself something fair as you grow and build a thriving company. It's hard to focus on business when you're "unnecessarily broke".

Be awesome. Good question, dude.


Answered 6 years ago

There are several factors you need to consider such as what other resources you have available for the business, the current gross/ net profits, are there other founders taking salaries, what are the available opportunities for you to defer your salary and put it toward growing the business, etc
In my case being the key founder in very tough economic cycle I had no choice but not to take a salary for the first few years. Even after my venture was cash flow positive I took half my normal salary and showed the balance as deferred comp - so that it was reflected on the books - and available for me later to take as salary or put towards equity
You used the term Potential 1M revenue firm so I am not sure where u stand now - happy to give more insights if u can give me more 'Clarity' !
Good Luck!


Answered 6 years ago

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