Entrepreneur's Salary - How much do Entrepreneurs Earn
How much does an entrepreneur make? Salary for entrepreneurs is important. Entrepreneur salaries are not defined. An entrepreneur's average salary around the world is anywhere between $58,000 to $70,000 USD per year. But is that for real? How much do entrepreneurs make a month? There is no fixed amount to entrepreneurship salary. The average salary of an entrepreneur varies depending on the type of business.
Isn’t Entrepreneur the owner of the business, then how does an entrepreneur's income or it matter what salary he draws?
When you left your fixed salaried job to start your business, you would've never thought that you would ever Google “Entrepreneur Salary” or “Entrepreneurs yearly salary”.
Nevertheless, if you have searched for it then it's a good sign for the business. This simply means that your business is generating profits and now you have the liberty to take out some salary for entrepreneurs and spend on the necessities. Some individuals often search for jobs post an entrepreneurship degree. If you want to know more about the salaries of different individuals post an entrepreneurship degree, refer to the bottom.
Most often in the first few years of a start-up, it's rare that an entrepreneur can draw a salary from the business. Moreover, an entrepreneur's average income can not be defined as the capital is mostly invested in growth activities such as hiring new employees, new equipment, or software among other important upgrades. This is a crucial stage for any business and once it has grown to its full potential, that’s the time to reap the benefits.
When should an Entrepreneur Begin to Draw Salary and How much?
As an entrepreneur, taking a fixed salary can be motivating and rewarding. But what is the average salary of an entrepreneur that he should take out of the company? As a common notion, you should not take a salary as long as your company is in its start-up phase. Diverting money out can bleed your coffers dry and leave you exposed to any future turn of events that are unfavorable. Do young entrepreneurs often wonder if businesses in an online business earn more than the traditional ones? A digital entrepreneur's salary or an internet entrepreneur's salary is no different from a regular entrepreneur.
If you are making nice profits, one must consider using some of it, only for necessities. What must be entrepreneurs starting salary? How much money does an entrepreneur make a month? In the beginning, an entrepreneur's salary range can be anywhere between 2000- 3000$ a month covering his basic necessities. After all, you have worked hard and you very well deserve it. Now the question is: How much salary should an entrepreneur get? There are numerous ways to figure out the salary of an entrepreneur.
1. The Market
If you are planning to cash out a significant chunk of profits from the company’s account, think again. What would a person similar to your skillset cost to run your company effectively?
How much would you pay someone to be the MD or CEO? This will help clean up the air and you will know exactly how much of a premium salary you are currently taking as the owner.
It's ok if you want to take some premium, after all, you have worked hard day and night to accomplish your goal. The only thing to consider is to know exactly if the company can afford any premium and do you need the money for necessity or luxury.
A premium over the average salary is ‘OK only if it's entirely necessary. But if it is for luxuries, you should make sure that the premium is not hurting the Goals of the business in the short run as well as the long run.
2. Percentage of your Profits
In the beginning, phase, when the profits aren’t too big you can take out Entrepreneur’s salary as a fixed percentage of the profits. The entrepreneur's salary range should be between 30- 50% of the profits earned and involve a capping to be placed at a fixed highest amount.
This will allow you to strike out fixed expenses at the very beginning of the month. A 50% salary amount allows another half of the profits to go back into the growth of your company. This helps build a war chest for the bad times. Remember,” Those who sweat in Peace don’t bleed in War.”
3. Future Growth Requirements of the Company
As a startup, the growth of the company is far more important than an Entrepreneur’s Salary. Do you need additional funds for new equipment or an upgrade? Do you have a war chest ready, for a downward phase if it appears in the market? These are the questions you must ask yourself before you take out your salary. It's important to give the necessary free cash flow to your company and let it grow and blossom into a full-fledged self-sustainable business.
Cutting short free cash flow at such critical times will delay the growth process and you will ultimately have to spend greater time and energy to reach your goal.
4. Check Your Finances
Another important factor to be considered before, eying a hefty paycheck from your company is the condition of its finances.
Is your business coming out of a critical financial crisis? Or is it a nice and steady offering good returns?
Consult your Accountant and ask for financial reports. If the business is offering good returns and the financial condition is good, then Entrepreneur's Salary can be above market standards even at a premium.
Cost to Start a Business & Entrepreneur’s Returns?
The cost of starting a business depends on the market and the type of business. As an entrepreneur, your salary ie. The returns depend entirely on how good your business is doing in terms of profits.
If you are trying to get into the manufacturing industry, it's obvious that the costs are much higher owing to the equipment, manpower, land, and construction costs.
Whereas a services-based business needs a significantly low investment. In the US the estimated cost of starting a business on an avg is $40,000. This is very low when compared to the returns a business can offer. All you need is the right effort and focussed approach that can lead you to unimaginable success.
Steve Jobs started Apple with an Initial Capital of $1350 and today the valuation of the company stands at $2.08 Trillion. There is absolutely no limit to the returns that an entrepreneur can achieve from his business, so don't hush into drawing hefty salaries for yourself.
Returns and an Entrepreneur’s salary also depend on the margins and the competitiveness of the industry. Margins and competition are Inversely proportional to one another. If the margins are good and you have the necessary domain knowledge, you can easily earn up to $70,000 per year as an average salary.