Raising Giants #005:
Reading time, 3 minutes
Should you be working for free?
It’s a big question for founders.
Because how much you pay yourself and others early in your business is really important.
Many founders don’t consider paying themselves a wage from the company in the first few years, but you do still have to survive to ensure that the company does.
And good investors don’t expect you to build a huge business if you can’t pay the bills at home.
Plus, most founders have already committed significant personal funds just to get initial traction, let alone having to work for free.
If by a miracle your company makes money straight away and isn’t a service business – amazing – let us lie down and process that for a moment.
If you’re like the other 99.9% of Founders, you need to seriously consider cash flow for the business’ needs and for your own.
The trick is to work out what’s acceptable if you are taking on investment.
Realistically, we’d say think ‘modest’.
You can’t put in a ridiculously low salary that may not grow in line with your next round. Similarly, starting out at six figures just isn’t going to fly for a business that hasn’t yet proved its worth.
If you’ve not yet planned for salaries, now’s the time to take a serious look at what you want to take out of the business as you grow.
And it’s worth thinking now about what you’re planning for the future in your financial model.
Will you be the highest paid at the company, or keep your salary modest?
Or could you take it further and pay everyone the same amount?
That’s what Naomi Bacon from Tandem Collective does.
She always has done too. Even now the company is in profit she still maintains this rule. Naomi says:
‘We’re all paid the same, including me. For me, the true meaning of inclusivity is that everyone is valued equally; we all have different skill sets and we are all of value.This promotes loyalty and roots out people that are self-serving or competitive in the wrong ways – that’s not what Tandem is. We are all ambitious and driven, but that’s channeled into our work rather than individual status or comparison within the company.’