Do you pay yourself a wage as a business owner? Do you account for your time when calculating job costs?

There’s an exercise I do in a lot of my Strategy Sessions where we calculate business costs and determine your current margin (aka profit). 

Whenever I ask “Do those costs include your time?” I get a lot of this action… followed by: “But doesn’t my income come from the profit of the business?”

Here’s the thing. The only way to create a profitable, sustainable business is when ALL labor/time is accounted for in your true costs.

When calculating labor costs on any job, your personal hourly rate should be counted as what it would cost if you were to hire someone of similar skillset to do the same work on your behalf. (This will be lower than the price you charge a client.)

Once all of your expenses are accounted for—including your time— and you can still claim to have “money in the bank”, THEN you are truly on the road to being profitable.

And then you can have a great conversation with an accountant about determining how to best pay yourself a well-deserved wage! What could be more satisfying than that?