The Most Common Mistake Business Owners Make
Here at EBS, we see it all the time – passionate, hardworking business owners who pour their heart and soul into their businesses but forget one crucial thing: paying themselves first.
It’s a story we hear over and over again, and honestly, it hurts to hear it each time. These talented entrepreneurs are building something amazing, but they’re slowly draining their own passion by not ensuring they receive the financial rewards of their hard work.
Let me share a quick story that really illustrates this point.
A Cautionary Tale
I once worked with an education consultant – an absolutely brilliant guy who was transforming schools with his expertise. His clients loved him, and he was making a real difference in the education system.
But despite his professional success, he was burning out fast. Why? Because he had fallen into the trap that claims so many business owners.
At the end of each month, he would dutifully pay all his expenses – the software subscriptions, the virtual assistant, the marketing costs, the office space – and when he got to the bottom of his list, there was simply nothing left for himself.
Month after month, this pattern continued. And underneath all his passion for education was growing a quiet resentment. He was working harder than ever but seeing less personal benefit.
What Was Really Happening?
This consultant wasn’t just making a financial mistake – he was sending himself a dangerous message that his contribution was the least valuable part of his business. Every time he put himself last in the payment queue, he was unconsciously devaluing his own worth.
When we sat down together, we realised he needed to completely flip his approach. Instead of paying himself with whatever was left over, he needed to pay himself FIRST – before any other business expense.
Why “Pay Yourself First” Changes Everything
This principle is absolutely transformative for business owners, and here’s why:
- It honours your value. Your time, expertise, and leadership are the most valuable assets in your business. Pay accordingly!
- It creates sustainability. A business that can’t pay its owner properly isn’t truly profitable – it’s just a demanding hobby.
- It protects your passion. Financial strain is one of the fastest ways to kill your enthusiasm for your business.
- It improves decision-making. When you’re paid appropriately, you make better strategic decisions instead of operating from scarcity.
- It forces business evolution. If your business model can’t support paying you first, that’s valuable information that something needs to change.
How to Implement This Principle Today
Ready to start paying yourself first? Here’s how to make it happen:
Step 1: Determine Your Baseline Compensation
Work out what you reasonably need to maintain your lifestyle. Be honest – too high isn’t sustainable, but too low defeats the purpose.
Step 2: Set Up Automatic Transfers
Schedule these for the same day each week, just like you would for any other critical business expense.
Step 3: Create a Separate Personal Account
Keep your business and personal finances clearly separated – this makes the whole process cleaner and more psychologically powerful.
Step 4: Review Your Business Model
If you can’t afford to pay yourself properly, it’s time to examine your pricing, services, or cost structure.
Step 5: Address Your Money Mindset
Many business owners have guilt or anxiety about prioritising their pay. Work through these emotions – your business exists partly to support you financially!
The Surprising Result
When we helped that education consultant implement this approach, something fascinating happened. Once he committed to paying himself first, he suddenly found creative solutions for managing his other expenses. He became more discerning about which costs were truly necessary. His pricing became more appropriate for the value he delivered.
Most importantly, his passion for his work reignited because he no longer felt like his business was taking advantage of him.
Your Next Steps
If you recognise yourself in this story, don’t worry – you’re in good company. Most business owners have struggled with this at some point.
The key is to start now. Even if you begin with a smaller amount than you’d ultimately like, the act of prioritising your compensation sends a powerful message to yourself and sets your business on a healthier path.
Remember: A business that doesn’t pay its owner isn’t truly successful, no matter how impressive its revenue might look on paper.
Want to discuss how to implement the “pay yourself first” principle in your specific business? Our team at EBS is always here to help you create financial systems that sustain both your business and your passion for it.
