You have the vision, but is it viable?
Lessons in entrepreneurial martyrship and paying myself last
I looked around and wondered if I belonged in the room — I was the youngest person there, I didn't operate a financially successful enterprise, and I'd never sold a business. And then I remembered the words I've heard many times before across different mediums: if you're in the room, you belong there, full-stop.
I was in that room precisely because of my unique lived experiences. The group leaders assured me that the lessons learned from my business successes and mistakes, paired with a sincere interest in helping other entrepreneurs avoid similar pitfalls, were exactly what they were looking for. And, of course, the older, wiser, and more successful-on-paper people in the room were also there because of their own peaks and valleys.
My biggest lesson came from having a low sense of worth around money. I never paid myself in past businesses even though I really could have; A fact that hung over me for a very long time like a big storm cloud of failure. As I shared in my book OPEN: Big Lessons in Small Retail and Living the Shopkeeper Dream, my definition of success was exclusively tied to making money, or rather, not bringing it home. By the time I hung up my Shopkeeper hat for good, my sense of self-worth was in shatters. I had built a beautiful independent retail store that my community valued, with sales and operations that supported employees, artists, brands, vendors, and suppliers through financial payments. I closed the five-year business without any debt, BUT I never paid myself a single cent.
I never even made a proper plan to pay myself. My painfully undefined plan devalued my time, skills, and efforts. I share this here and in my book with complete vulnerability. At one point, saying all of this publicly would have made me feel naked, ashamed, and like a failure. But now, it feels like growth, and I'm happy to get vulnerable if it means helping someone set their dream business up — set themselves up — better.
There's VULNERABILITY in being honest about your business's VISION and VIABILITY.
If vision and viability are co-pilots in the entrepreneurship aircraft, it's as if I let passion, the VISION for my businesses, take the lead in the steering. I then let VIABILITY take naps and wake up from time to time to help navigate and engage in conversation. Financials live in the viability seat. A business must be viable, and paying you, or else it's a hobby.
It killed me to think that my store had become a hobby on paper. It wasn't until I was neck-deep in frustrations with the trajectory of my Shopkeeper Dream that I started asking myself:
Why am I working so hard not to be financially compensated?!?
This is precisely the question I DON'T want other entrepreneurs, retail or not, to ask themselves for the first time years after they've opened for business. This question should be right in line with what will I call my business? It's asked and answered before you make your first sale.
Put it this way: would you take a job for someone else and accept not getting paid for your work? Your answer will likely be no unless it's an unpaid internship or apprenticeship. So why would we take a zero-sum salary for working hard in and on our OWN business?
When starting out, it can be challenging to know what your monthly sales will be, or when the needle will move enough to start paying yourself. Yes, there are unknowns with sales — like how many people will walk into the store one month to the next, or visit online and make a purchase — but A LOT of knowns can be put into a Profit Forecast. A Profit Forecast and Profit & Loss Statement (P&L) includes Direct Costs/Costs of Sales and Indirect Costs/Expenses or Overhead. The former all depends on what you sell, how much it costs to purchase those items to get into a customer's hands, and the staff you need to facilitate the transaction. The latter is more or less fixed: rent, insurance, admin, tech … the stuff that gets billed and paid every month whether or not you make a sale. And because YOU work in and on your business whether or not a sale is made, this is where you itemize payment to yourself.
Even if you don't yet have the cash flow to write yourself a check, you treat yourself like an employee and pay yourself through a loan from The Bank of You (The Bank of You is made up of your financial and time + skills + energy investments). Say you determine that your monthly take-home needs to be $6,000 to support yourself, your family, and your lifestyle. Include that $6,000 in the Expenses section of your P&L as wages "paid" to yourself, even if that money isn't actually paid to your personal bank account. Doing this lets you see where your net profits need to be to pay yourself for real and see how long it might take to get there depending on your Gross Profits. Accounting for your hours and wages "paid" to yourself creates a debit so that your P&L statements reflect the actual costs of running your business (i.e. paying yourself a proper salary or what you'd have to spend to have someone else run your business for you). Using your P&L to see your TRUE expenses (that includes paying yourself) will help you make better decisions to raise your gross profits. As my mentor says, "Gross Profit is King."
So, how much do you pay yourself? Well, how much would you expect to get paid if you went out and got a job working somewhere else doing something similar? Or, if different, taking a role to support your life? Set your base salary on that. Don't be shy or humble, or become an entrepreneurial martyr like I did. You are valuable and valued. Financial compensation for all that you create and do should be a given.
Some of you reading this may be thinking, “what’s the issue, of course I had a proper plan to pay myself” or “I started paying myself from Day One!” If this is you - YAY, well done!! I’m surprised you’ve read this far since all of the above might sound as foreign to you as it did to a client of mine.
From a previous post: No Profit Like Beckham …
In a recent conversation with a small retail store owner, she exclaimed, "Why wouldn't you pay yourself? Why else are you doing this?"
Short answer: Passion can be the strongest motivational blindfold.
I also offered these as possible reasons entrepreneurs may not pay themselves:
The belief that most businesses don't turn a profit for a few years.
The belief that most entrepreneurs don't pay themselves at the start.
The belief that there will be a big payout, even if delayed, after x amount of time and effort …
… So, why else have a business if not to make money, as the shopkeeper recently asked me?
The answer can also be that it's both and.
Most entrepreneurs are fueled by a passion and a drive to make money through that passion. This "both-and" gets messy when entrepreneurs tie their self-worth to how much money they make or don't. Having muck around money matters doesn't help money matters.
Perceptions also get messy when we judge an entrepreneur's contributions to their customers and community solely based on profits.
The goal is to align our both and WITH a high sense of self-worth.
My mentor from the group of business experts mentioned above helped me expand on what it means to make a plan to pay yourself — and valuing your own worth. I now have an understanding and method that I didn't have when I started on my own, and if I ever revise my book, I will include it! Until then, thankfully, we have this Substack to keep working with, and really, that was the whole point of starting Retail Rookie, and now Open For Growth on Instagram: to continue to explore, expand, consider, and celebrate what is true about the retail entrepreneurial journey. And how to better align ourselves to both and.
We're constantly learning and growing from other people and ourselves, our peaks and valleys, yet the most significant lessons come from lying face-flat on our valley floors. And that's okay. It's life. The best we can do is dust ourselves off, reflect on the journey, and vow to use the experience well. And in my case, vow to share my lessons learned so that I may support present and future retail entrepreneurs launch and evolve stronger and wiser. Our dreams are too much fun and meaningful not to give them our best shot.
Stay OPEN,
AMM
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💕 Let's work together:
I've opened up 1:1 consulting and mentorship sessions! If you think I may be the gal to help guide you through the next phase of your retail entrepreneurial journey, click here and reach out :)
UPDATE:
I forgot to tie this post into why business is personal and the value in Taking Personal Inventory. Never too late (or too proud) to correct ;)
My book:
OPEN: Big Lessons in Small Retail and Living the Shopkeeper Dream
