How Much I Paid Myself (At Every Level of Business)
How Much I Paid Myself (At Every Level of Business)
“Scared money doesn’t scale.”
— Ryan Dice, founder‑CEO of multiple 8‑figure companies
When I first started a business I treated my own pay like a mood swing: if the month was good I splurged, if it was bad I stopped paying myself. That chaos almost broke my company and left my family in a constant state of worry. A single mentor’s five‑word mantra changed everything.
Below is the practical framework I use today to pay myself—and the rest of the world—to keep a business healthy, scalable, and profitable.
1. Pay Yourself a Consistent Salary
Why a Salary Matters
- Confidence – A steady income removes panic from decision‑making.
- Credibility – Investors, employees, and customers see you as a serious business owner.
- Cash‑Flow Discipline – It forces you to treat the business as a separate entity.
How to Set It
| Revenue Tier | Typical CEO Salary | Notes |
|---|---|---|
| < $1M | $120k‑$200k | Pay for the actual role you’re doing (e.g., GM, VP of Sales). |
| $1M‑$10M | $200k‑$350k | Market rate for President/CEO. |
| > $10M | $400k‑$600k | 100th percentile + equity bonuses. |
Step‑by‑step
- Define your role – Are you truly the CEO or a senior ops person?
- Research the market – Use Salary.com, Glassdoor, or even ChatGPT.
- Choose a percentile – 50th‑65th for conservatism; adjust quarterly.
- Add a buffer – 15% extra to cover living expenses + personal savings.
Example: If the replacement cost is $150k, pay yourself $172.5k ($150k + 15%).
2. Set Aside for Taxes
The government is the only vendor that doesn’t have a refund policy.
- Open a “Tax Vault” – a separate savings account.
- Save 20‑30% of cash flow (consult your CPA).
- Review quarterly – if you’ve over‑saved by >10%, sweep the excess into the distribution account.
This habit turns surprise tax bills into a predictable line item, giving you peace of mind and preventing cash‑flow shocks.
3. Build an Emergency Fund
Keep 3‑6 months of operating expenses in a money‑market account.
| Revenue Type | Recommended Cushion |
|---|---|
| Recurring (subscriptions) | 3 months |
| Project‑based / Seasonal | 4‑6 months |
Optional – Secure a line of credit against the fund for double coverage.
If cash runs low, you can tap the credit without cutting payroll or your own salary.
4. Create a Distribution Waterfall
Distributions should be policy‑driven, not emotional.
- Define Minimum Operating Balance – usually 1 month of OPEX.
- Monthly Sweep – move everything above that into holding accounts:
- Tax Vault
- Emergency Fund
- Investment Reserve
- Distribute the Remainder –
- 80% to the Distribution Account (paid quarterly)
- 20% held until year‑end
- Tie Team Bonuses to Distributable Cash – not just revenue or P&L.
Key Insight: A healthy business creates cash, not just profit.
5. Install Pauses & Green Lights
Use hard rules to decide when to pause or green‑light cash outflows.
| Condition | Action |
|---|---|
| Cash runway < 2 months | Pause all distributions & raises |
| Two consecutive months below profit target | Pause |
| Debt usage > 50% of line of credit | Pause |
| Cash runway > 3 months & Rule of 40 met | Green‑light distributions & raises |
Rule of 40 – Growth rate + profitability ≥ 40% (or 45/50 if you’re aggressive).
Also check that 12‑month free cash flow can cover new salaries × 12 with a 1.5× cushion.
These rules keep emotion out of finance and ensure you’re rewarding performance, not vibes.
Quick Recap
| Step | What to Do | Why It Matters |
|---|---|---|
| 1 | Pay a consistent salary | Removes panic, builds credibility |
| 2 | Save for taxes | Avoids surprise bills |
| 3 | Emergency fund | Keeps payroll on track |
| 4 | Distribution waterfall | Creates predictable cash outflows |
| 5 | Pauses & green lights | Keeps decisions objective |
Final Thought
Paying yourself well isn’t selfish—it’s good stewardship.
When you’re financially secure, you can lead strategically, invest in growth, and keep the business stable. The same principles that keep your personal life afloat also keep your company’s cash flow healthy.
If you’re still struggling to find the cash to pay yourself, check out my video on the Five‑Account Cash Flow Waterfall System. It shows how to free up cash without starving growth.
Remember: Scared money doesn’t scale. Pay yourself, plan your cash flow, and let your business thrive.