073: Struggling to Pay Yourself More Even Though Your Business is Growing
Have you ever found yourself in this rut? With the idea that no matter how much money your business makes or how many clients you take on, you still won’t be able to pay yourself more?
In this episode, I’m uncovering how to rethink your costs as a business owner and why it’s important to reframe your CEO pay into the category of an overhead expense instead of a direct cost.
I’ll talk about how you can make this transition, my advice for getting rid of the habits that could be standing in the way of your goal and how making these changes are essential as you make the transition of stepping into the role of an agency owner.
What’s in this episode:
- The difference in decision making when you’re involved in client delivery
- The 2 things you must do when stepping into the role of agency owner
- The transition of your CEO pay as an overhead expense vs. a direct cost
- How you can make this transition work for you
- My advice around breaking habits that aren’t helping you with this goal
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EPISODE TRANSCRIPT:
Download the Episode 73 Transcript
You’re listening to the Scale Your Way podcast, where we share simple, proven strategies just for done for you service based companies. Here, you’ll learn how to scale your business on your own terms so that you can have more time, money, create a bigger impact and a better life. I’m your host, Nicole Jackson Miller. Let’s dive into today’s episode.
Hello, hello, everyone, Nicole here today we are talking about what to do if you are struggling to pay yourself more inside of your business, even though your business is growing. Before we dive in. Hello, I’m Nicole and I help done for you service providers, step into the role of agency owner and create a really great and caring experience for all of the people in their business, including their clients, their team members and themselves too.
So today we’re talking about paying yourself and what to do if you’re in a position right now where your agency is growing but you are still feeling like you are not paying yourself enough, perhaps your revenue has gone up and you’ve hired and team members and you just feel like there’s not enough to pay yourself more.
So let’s start off with this. When you start your business, oftentimes you are the only person working in your business or you have a small, small team and it’s very likely that you are involved in client delivery, meaning that any time you take on a new project, you are part of the delivery process, whether it’s communicating with a client or actually doing some of the work. If you are in systems integration, maybe you’re the one who is strategizing the system that you will be delivering for your clients. You may also be setting up the system for your clients and actually implementing it. Perhaps you’ve been doing all of it. Maybe you have team members helping with some of it, but you are involved, right? And when we are involved in client delivery, we make different decisions. Right? And so part of what I do is I help business owners step out of client delivery to really own the role of agency owner. And so when we step into the role of agency owner, it is required that we let go of a lot of aspects of client delivery. I’m not going to say all aspects because some people want to continue to be in a portion of client delivery, and that is totally fine. It’s up to you.
However, we don’t want your business to rely and depend and be built around you being involved in client delivery, because what happens is that then you become the bottleneck. And so we want to build a business and have the business foundations of being able to scale and then you can decide how big you want to grow it.
OK, so when you are truly stepping into the role of agency owners, there are two things that you have to do and change, right? Moving from done for you service provider being involved in client delivery to being an agency owner. And that is one what needs to shift is who you are managing when you are starting out. If you are in client delivery, which many of you are, you are managing yourself right and your deliverables and you are likely managing your client. When you shift to agency owner, you shift who you are managing to managing a team. You are managing your team so that they can do their work and also they can manage your clients. So that’s the first thing that needs to transition. And the second thing that needs to transition, which we’re going to talk about today, is how you’re paying yourself.
So when you first start your business, if you are the one doing all of the work, how do you pay yourself? Right? You get a client, you get the money from that client, and then you pay yourself to do it right? And so as you start thinking about building a team, things need to shift and transition. And so instead of you being a direct cost, right. Which is you get a new client and you pay yourself based off of the money that you’re receiving, you need to transition to being an overhead expense. Right? So you are no longer paying yourself based on the amount of clients that you have or the amount of contracted work. Right? You’re you’re moving from being that direct costs to being an overhead expense of your business so that you can use that money to pay other people to do client delivery, how you pay yourself when you’re done for your service provider. Right? We’ve talked about that. You are a direct cost.
So what happens when you are in this identity? Right. The identity of a new service provider, meaning I got a new client and I pay myself, is that it’s very easy to think, OK, well, if I am now going to take that money I’m getting and pay a team, I’m not going to get paid as much. Right. I have to pay myself less. And this is what we want to avoid because what will happen if you are truly trying to remove yourself from client delivery is that the same thing goes if you’re wanting to make more money. So if you have that thinking right, like I’m making money from clients, if I hire someone else to do this, I need to decrease my CEO pay or I can’t increase it at all. Then what happens if you actually do want to pay yourself more, ends up becoming really attractive to take on a client and just do the work yourself, right? Because you want that money to just come to you, you’re like, you know, I’ll just do this work, I’ll pay myself, and then that way I can have other clients and other team members to do those clients. Right, because I’m not making as much of a profit that can come to me.
This can be a temporary solution. But the key here is that is this temporary because we don’t want your business being built on you having to be involved in client delivery. It could be a conscious choice, but we don’t want it to be built so that you still need to be involved in order to pay yourself. Because then what is the point of having an agency? What’s the point of having a business? So as you transition from paying yourself from being a direct cost, we really want you to start shifting to being that overhead expense.
So how do you do that? So as you transition to having a team support your client delivery, you need to make sure that your packages are profitable enough to pay your overhead expenses, including you. You can treat it the same way as if you were to sign up for, let’s say, a coaching program. And so let’s say the coaching program was $1,500/month. Right? So you are paying that regardless of how many clients you have. And so we want to look at paying yourself the same way. Right. You have a set salary and you pay yourself that salary regardless of how many clients you have. Now, that sounds nice, but in order to actually do this and implement it, it can’t happen overnight because it’s very likely that your packages are set up to be paying you right. As a direct expense as opposed to an overhead expense. So we want to make a few shifts to really up that profit so that you have enough profit to be able to cover yourself after paying team as that overhead expense.
Now, this is something that I cover inside of my program AGENCY, inside of the delegation method that we have, which talks about what you need to take off of your plate first and how to create a transitional plan so that you’re not only prioritizing the most important things that need to come off of your plate next, but you’re also prioritizing how it’s going to work financially. Right, because we could have this whole list of things that you need to delegate. And yeah, it’d be great. You would probably be out of client delivery if you just delegated all those things tomorrow. But it’s likely that it might not work for you financially in order for you to do that. Right. So we want to create a transitional plan around this. And so the first thing that we talk about inside of the delegation method is what needs to be prioritized to come over your plate next, how it’s going to work financially, make sure that it does work financially and that there’s not things that might need to shift first in order to make it work financially. And then we talk about if somebody on your current team can handle it or if you need to hire someone new. And then and then we look at some of the additional items that need to come off of your plate and create a transitional plan for those items.
So some of you may be thinking, yup, I know I need to shift this stuff. This is very practical. Maybe you already have packages that are profitable enough. Maybe you are already able to pay yourself more, yet you tend to default to always stepping back into client delivery in order to pay yourself more. Or maybe you just are so scared to pay yourself more because there’s a lot of what ifs. Well, what if we don’t get this client? What if half of my clients leave? What if what if what if..
So, a lot of people that I have heard and talk to will blame this on a money mindset. And the term money mindset to me is a very kind of like a broad, nonspecific statement, like I don’t really know what that, what that means. Right. There’s a lot of there’s maybe a lot of reasons why you’re doing it. But when it comes to fixing it or actually working towards a solution, what I found to be the most effective is to think about it in terms of a habit, right? if you have a habit right now that every time you get a new client and you’re like, “oh, I could use I could use some more money,” you end up just taking it on and then maybe even regretting it after you’ve taken on rate. That’s a habit that you’ve established because that’s probably what you’ve needed to do over the course of the years of you starting your business. It may be a habit that you are currently paying yourself what you’ve been paying yourself for three years. Right? And it feels a little uncomfortable to change that habit, to pay yourself a little bit more, just like any habit. If you can think about a habit that you’ve had, I would love for you to think about how you like to break habits.
What I have found that there are some people who are like, I’m changing the habit. Tomorrow we’re just going to go cold turkey, you know what I mean? If you a habit of mine that I’ve been wanting to do since having a baby is to exercise a little bit more. Right? And so the way that I like to do that is a little slow and steady. I like to add maybe like, OK, I’ll do it once a week. I’ll do it twice a week, I’ll do it three times a week. My husband, when he wants to change, is like I’m going to change everything. I’m going to do all of the workouts and exercise every day a week. I’m going to change all of my supplements. I’m going to fast like everything. So I want you to think about what has worked for you in the past when it comes to changing your habits. And this is what I will say. What I have found to be the most effective is to take a look at what is around you right now and what are some small things that you can change immediately to be able to start gaining momentum, to want you to change more.
For example, could you pay yourself one hundred dollars more per week right now? Maybe it’s one hundred dollars. Does that feel comfortable to you? Is it a thousand dollars? Is it five dollars? What does that look like? But what could you change right now to start feeling a little bit more comfortable with paying yourself more? Another thing could be that maybe you have new clients coming in, and instead of allowing your team to take on that client delivery, you’re jumping in to do it yourself. And you are doing this because you think that you want to be able to pay yourself that money, even though you don’t necessarily need that money in order to pay yourself more. So this is also a habit that you can transition. So I want you to see what is on your plate right now that you could be delegating. And that’s like an opportunity right in this very moment and pause this video and go delegate that thing. Or you can also put a little I love Post Its.. I love Posts Its as reminders. Right? Because this is how we slowly start changing the habit.
You can write a Post-it note to say, I will no longer take on more work. So if a new client comes in, you can look at that Post-it and say, no, no, no, wait. Like, my instinct is to take this on. But I remembered my goal is to delegate this to the team and I have enough money to pay myself and all is well. OK, so those are a few ways that you can start really thinking about how you can shift some steps that you can take to make sure that you have that profitability within your packages to pay yourself. And also if you already have that profitability, but you still find yourself just struggling a bit with breaking that habit. Some tips for how to continue moving forward and slowly start shifting that habit and gaining more momentum, because that is something that once you gain the momentum, it becomes fun. Right? You start seeing results, right? It’s like me exercising. And then, you know, I was so out of breath, out of running for ten minutes, but then all of a sudden I feel much better and I can run fifteen minutes and now I want to run twenty minutes. Right? And it’s just getting this momentum up.
The same thing goes for paying yourself more inside of your business and really being able to shift some of those habits. So I would love to know from you what is it that you want to shift and change? Is it something that is very practical? Go into the spreadsheet, figure out some ways to make your packages more profitable so that you can pay yourself more? Is it more of a habit switch that you need to start slowly challenging to get yourself to really be able to step into that agency owner identity?
And if you are interested in getting more support around delegating client delivery so that you can move from being the person who has to constantly be involved all of the time and your business and in client delivery to being able to delegate at least 50 percent of client delivery in the next 12 months or less. Applications are now open for my program AGENCY. I would love for you to take a look at the page and see if you might be interested. Once you apply. There’s an assessment that you take that will provide you some insights on where you are right now and give you some goals on what you can do to move forward. And if you have any questions, feel free to reach out. I hope you all have a great rest of your day. If you are interested in AGENCY, you can head over to NicoleJacksonMiller.com/apply and I would love to see your form come through. All right, everyone, I hope you have a great rest of your day. And here is to paying yourself more either starting today or creating a plan for you to pay yourself more within the next few weeks. All right. Bye everyone.
Thanks so much for tuning in. If you are ready to stop settling for being a done for your service provider and really fully step into the role of agency owner and CEO and lead a team that you love that just delivers excellent client results, then you have to check out my new program called AGENCY, which is specifically designed to remove you from at least 50 percent of client delivery in 12 months or less, so that you can have the time and the space to be able to run your business and, you know, to take a tech free vacation, too. That’s always nice, right? So if you’re interested in. Learning more, head over to NicoleJacksonMiller.com/apply. You can learn more about the program. If it looks like a good fit, then apply and we will send you before our call. We’ll send you a free business assessment that will really explain more about the framework that we use to remove you from client delivery. And it’ll give you an assessment that you can take to really show where you are now and where you’re going. We’ve had so many people get a lot of insight just from taking that assessment, so I can’t wait for you to check it out.
