Whether your investors are friends and family or VCs, here’s a guideline on how to pay yourself as your start-up grows.
Most entrepreneurs depend on outside investment in the star-tup phase. Knowing what is reasonable to pay yourself when you are running on somebody else’s bankroll is a sensitive matter. Here are salary guidelines to consider for the different stages of your business.
Before outside investment: When you’re just launching, prepare to forgo a salary. “If they can live on peanut butter and jelly sandwiches or baloney sandwiches until the big promise comes in and they can make their gazillion dollars, all the better for them,” says Harry Schum, senior consultant with Compensation Resources, Inc., a human resource consulting company headquartered in Upper Saddle River, N.J.
To get through this period, you should have saved up enough cash to cover living expenses for between 18 and 24 months, adds Lori Hoberman, chairwoman of law firm Chadbourne & Parke LLP’s emerging companies/venture capital practice in New York.
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