How Much Money Should You Really Pay Yourself as a Founder?
Paying yourself too little as a founder = underestimating your worth. Paying too much? You’ll starve your business. Here’s how much you should pay yourself without killing your startup.
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Summary
- Pay yourself enough to cover essentials and avoid burnout — undervaluing yourself hurts both you and your business.
- Align your salary with your startup’s stage: keep it lean early, adjust as the business grows.
- Balance personal income and reinvestment — prioritize sustainability over short-term sacrifice.
This isn’t just about ego or optics; it’s about long-term survival — yours and your company’s. So, how do you strike the right balance? Here’s a candid, practical look at how to approach your own paycheck as a founder.
Table of Contents
- Why Paying Yourself Matters More Than You Think
- How to Decide Your Founder Salary
- When NOT to Pay Yourself (and What to Do Instead)
- How to Talk About Your Salary with Investors
- Practical Steps to Balance Your Income and Reinvestment
- Avoiding Burnout While Building Your Business
- The Bottom Line: You Deserve a Paycheck
Why Paying Yourself Matters More Than You Think
It’s tempting to go without a salary for the good of the company, especially in the early days. You want to show commitment, conserve cash, and impress investors.But this mindset has risks. If you’re perpetually stressed about rent or groceries, your decision-making suffers. Long hours and mounting financial worries can lead to burnout, which kills both momentum and morale.
Think of it this way: your well-being is an investment in your company’s success. When you pay yourself, you’re not siphoning resources — you’re ensuring you have the energy, focus, and stability to grow the business.
How to Decide Your Founder Salary
The amount you pay yourself depends on your business stage, cash flow, and industry norms. Here’s a framework to help you determine what’s reasonable:1. Match to Your Stage of Growth
- Early Stage/Pre-Revenue: At this stage, your company can’t afford hefty salaries. Pay yourself just enough to survive and cover essential personal expenses. If you have savings, consider tapping into them but set clear limits.
- Post-Revenue: Once your business has consistent cash flow, your salary can reflect both your needs and the business’s capacity to pay. Still, keep it modest compared to market rates.
- Growth Stage: If the business is scaling and generating profit, your salary should rise incrementally. Avoid huge jumps; align raises with revenue or funding milestones.
2. Base It on Essential Personal Costs
Calculate your basic living expenses — rent/mortgage, groceries, insurance, and utilities. Factor in things like student loan payments or family needs. This is your baseline.Let’s say you need $3,500 a month to get by. If your startup’s revenue or funding supports this, start there. Paying yourself too little creates financial pressure that could force you to make desperate business decisions.
3. Look at Industry Benchmarks
While you shouldn’t match CEO salaries of big corporations, it’s helpful to know what other startup founders in your industry are paying themselves.Reports like those from AngelList or Carta can provide median founder salaries by funding stage.
For example, a pre-seed founder might make $50k annually, while a Series A founder might earn $100k.
When NOT to Pay Yourself (and What to Do Instead)
There are rare scenarios when paying yourself a salary can wait:- If the Business is at Risk: If you’re weeks from running out of cash, you might need to forgo a paycheck temporarily to keep the lights on.
- Short-Term Bootstrapping: If you’re bootstrapping and revenues are unpredictable, a temporary pause may be justified. But always communicate this with transparency to co-founders and your team.
Instead of avoiding salary altogether, consider:
- Deferring Your Salary: Record the amount you should earn and pay it later when cash flow improves.
- Equity Trade-Offs: If cash is tight, balance it with additional equity. This only works if you’re confident the company will grow and deliver value.
- Income from Side Projects: If you need to bring in money without draining the business, freelancing or consulting can help bridge gaps.
Tip: avoid deferring salary for too long. It’s not sustainable and might cause tension with co-founders or investors.
How to Talk About Your Salary with Investors
When raising funds, some founders fear that asking for a salary will make them look greedy or uncommitted. Here’s the truth: most investors expect you to pay yourself.Be transparent and professional when explaining your salary decision. Frame it as a balance of personal sustainability and company growth. For example:
“At this stage, I’m paying myself enough to cover basic living costs, which ensures I can stay focused on the business without financial distraction. As we hit revenue milestones, I’ll keep aligning my salary with the company’s performance.”
Investors care about your ability to make sound decisions. Underpaying yourself may signal desperation or poor planning, which can raise red flags.
Practical Steps to Balance Your Income and Reinvestment
Here’s a simple strategy to split your cash flow responsibly:- Set a Survival Salary: Calculate the minimum you need for a reasonable quality of life. Pay yourself that first.
- Establish Profit Thresholds: Decide at what revenue or profit level you’ll increase your salary. For example, “Once we hit $10k MRR, I’ll raise my salary by $1,000.”
- Reinvest Aggressively: Ensure the majority of profits go back into growth, such as hiring, product development, or marketing. This shows discipline and vision.
- Create a Salary Cap: Even as revenue grows, cap your salary at a reasonable percentage (e.g., 10–20% of profits). This prevents unnecessary bloat.
These steps ensure you get paid while keeping the business on a healthy growth trajectory.
Avoiding Burnout While Building Your Business
Founders often wear their sacrifice like a badge of honour, but there’s nothing admirable about burning out. Chronic stress and exhaustion can kill creativity, slow productivity, and weaken leadership.Here’s how to avoid burnout without breaking the bank:
- Pay yourself enough to remove daily financial anxiety.
- Schedule time off, even if it’s a day or two each month.
- Recognize that self-care — sleep, exercise, and social connection — is critical for building a sustainable business.
The Bottom Line: You Deserve a Paycheck
Paying yourself as a founder isn’t about being selfish; it’s about sustainability. Your business depends on your energy, focus, and sound decision-making.Start with the minimum you need to live, increase it as the business grows, and always prioritize reinvestment.
You can’t build a thriving business if you’re running on empty. Be fair to yourself and your startup, and you’ll both have a much better chance at success.