Entrepreneurs don't get paid. They invest everything they can and everything they have into a venture that may not pan out, leaving them broke in the end but satisfied for having tried. But for the first two years of a business's existence, entrepreneurs generally don't get paid. They put all the revenues they earn from the business BACK INTO the business so that the business can not only pay it's current expenses, but can survive the inevitable dry spell that comes to all businesses.
A business is broken up into several financial areas. Land, Labor, Capitol, and Entrepreneurship. The entrepreneur has to furnish all of these when a business is starting, but over time if the business is successful the entrepreneur will begin to see a return on the investments they have made into the land, labor, and capitol required to start the business. The entrepreneur must find the land needed to operate the business, whether it be a warehouse or a spare garage. They must provide the labor required for the business to operate, often doing it all themselves with no help while pulling long hours and spending time away from loved ones. They must be able to acquire enough startup capitol to get the ball rolling, as you need to be able to pay for the land and the equipment required to operate.
In my case, equipment acquisition was far from overnight. I invested money, borrowed, and received gifts to acquire what I have today in the form of my studio equipment. I stayed away from credit, and own it all outright. This enables me to operate without the worry of credit payments looming at the end of each month, which allows my profit margins to be substantially higher. Not only do I owe less at the end of each month to keep the business going, but I paid zero interest on the equipment I have. This keeps my break even point as low as possible.
This doesn't mean I don't have debts. This doesn't mean I don't have bills to pay personally. I have credit cards to pay, and personal loans to repay. But I can't use any of the studios revenues for that purpose. If I were to do so, I compromise my business by stealing from it's assets. Anything that comes into the studio, I put back into the studio without exception. I have utilities and rent to pay, and will have inevitable equipment repairs and upgrades to pay for. I can't afford to wait for those things. I need to be able to take from the pool that the studio has earned and use it for the benefit of the studio.
If I were to take the money coming into the studio and use it for my own personal debts, it would seem logical to some. After all, I earned that money with my business, and I have those debts that need to be paid. But this sets me up to fail as it keeps me from investing in my business. It depletes my businesses ability to weather the inevitable dry spell. It keeps the finances of a business intertwined with my personal finances and makes book keeping a nightmare. It creates unnecessary risk that I cannot afford. If I were to take money from the studio revenues, it would be like operating my business paycheck to paycheck. To clarify the analogy, it is because I would always be worried about that next customer coming in to ensure that I could pay this bill or that bill.
At the moment, I don't take a paycheck from the studio. Every dime goes back to the studio. Every. Dime. Period. I do what I can to maintain a low overhead, and don't plan to buy anything on credit for the business unless absolutely necessary. I don't plan to upgrade equipment until it's necessary, and hopefully I'll have at least three months worth of expenses set aside before needing to make any upgrades. That way, if I make an upgrade and then face a dry spell for a few weeks, I'll be ok.
Dry spells are a part of business. Dry spells are a part of life. It's all cyclical, and depends on a million factors that none of us can foresee. I spent my 20's gambling with my financial future, and I'm done gambling. I won't life my life paycheck to paycheck anymore, and I won't operate my business in that manner either.
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