I remember the first year I went full-time into entrepreneurship. The excitement was real. The freedom was intoxicating. But the bank account? Brutally honest.
That year, I made less than I had in any of my previous jobs. And I’m not talking about a little dip — I mean real struggle. I’d left a job that paid around $60K/year and was suddenly pulling in about $40K, despite putting in twice the hours and taking on ten times the stress. Sound familiar?
Turns out, I wasn’t alone.
According to a 2017 survey by American Express and SCORE, 51% of small business owners pay themselves less than $100,000 a year — and many don’t pay themselves at all. A 2022 follow-up found that over 25% of entrepreneurs said they didn’t pay themselves a living wage, and about 10% admitted they had never taken a paycheck from their business (Melio Payments).
So how do we fix this?
It all changed for me when I discovered “Profit First” by Mike Michalowicz. Full transparency: I’m not affiliated with Mike in any way. We did have dinner together once in Nashville, though I doubt he remembers it. But his system? I remember it every single payday.
The Game-Changer: Profit First
If you’ve never heard of Profit First, let me break it down. It’s a method of cash management that flips the traditional accounting formula:
Old School: Sales – Expenses = Profit
Profit First: Sales – Profit = Expenses
Sounds simple, right? But it’s a complete mindset shift. Instead of treating profit as something you hope for at the end of the year, it becomes a non-negotiable from day one.
The strategy is built on a system of multiple bank accounts, each with a distinct purpose:
- Income Account – where all your revenue lands.
- Profit Account – a fixed percentage is transferred here twice a month.
- Owner’s Pay – this is YOUR paycheck.
- Taxes – so Uncle Sam doesn’t sneak up on you.
- Operating Expenses – what’s left over to actually run your business.
By allocating funds into each account based on fixed percentages, you force your business to run on what’s left after you’ve paid yourself and set aside profit. It’s financial discipline in action.
What It Did For Me
When I first implemented Profit First, I was skeptical. We were barely scraping by — how could we possibly start pulling out profit?
But I stuck with it. I started small: 1% to profit, 5% to owner’s pay. As revenue grew, so did those percentages.
Fast forward a few years, and I was paying myself 10x my starting salary. But more than the money, what blew me away was how our entire financial culture changed. We went from chasing invoices and sweating over payroll to confidently growing with clarity and control.
Oh, and when it came time to sell? We had years of profitability in the books — a major asset that created a much higher multiplier on our valuation. The difference was night and day.
Why Most Entrepreneurs Don’t Do This
We lie to ourselves.
We think:
- “I’ll pay myself when we hit this next revenue milestone.”
- “Once I hire more staff, there’ll be more for me.”
- “I don’t need to pay myself — I’m investing in the future.”
But what kind of future are we really building if we’re burnt out, underpaid, and constantly stressed about cash flow?
I’m not suggesting Profit First is a magic wand. It still requires effort, discipline, and adjustments. But it does create a system that forces us to value ourselves as the most important employee in the business.
Because you are.
A Leader’s Job is to Learn, Not Just Lead
One of the most important lessons I’ve learned in business — and one I share constantly as a coach — is that it’s okay not to know everything. In fact, it’s wise to acknowledge that.
That’s why I promote great systems like Profit First. Because my job isn’t to be the guru with all the answers — it’s to spotlight what works. Whether it’s an idea I created, a book I read, or a concept I borrowed from someone much smarter than me — like Mike Michalowicz — I want to pass it forward.
I’m still learning. Still growing. Still asking, “How can we do this better?”
Take the First Step Today
If you’re running a business and still not paying yourself consistently — or worse, not at all — I urge you to explore the Profit First methodology. Even if you start with 1%, that’s 1% more than you had before.
Your business should serve you too.
Because when the leader is thriving, the team can thrive. When the owner is stable, the vision becomes clearer. And when you’re finally paying yourself what you’re worth? That’s when you start building the life you dreamed about when you took the leap into entrepreneurship.
No guilt. No more starving artist. No more waiting “until next year.”
Make today the year you start paying yourself what you deserve.
