Money on the table: how many have to the founders of the business Bashny.Net

© Kevin van Aelst

The founders of the business are often free to assign yourself a salary. But how to determine the optimal amount? On the one hand, I want financial independence, on the other — a high salary may affect the development of the company. How much to pay employees, so they are not left to competitors and worked with maximum efficiency? Translation of answers to a well-known business experts: the most useful tips.

John Greathouse, Rincon Venture Partners co-founder

When we study start-UPS that are going to invest, be sure to ask what the salary is calculated to the founders. We pay attention only to those who are not waiting for wages to the market level, and are willing to limit yourself to Finance. Experienced entrepreneurs understand that investing is a very "expensive" money. They know that every dollar that they put in your pocket — especially at the beginning of the company, — entails a weakening of the company.

Of course, money is an important part of the business. But they should not disturb the founder. Salaries should be enough to cover the rent, I can't have this headache to be a distraction. Also not to be distracted by the choice of a new home who will buy their high salary.

But when the company proves that it feels great on the market will have to raise wages to the market average. However, even in the first more or less prosperous period, when it seems that the company is no longer on the verge of extinction, should be maintained sobriety in the calculation of salaries of executives. This should take into account the productivity of human labor and incentives that will increase.

Aaron Harris, partner at Y Combinator

The salary of the founder of the business must be calculated based on his needs. 21-year-old start-up entrepreneur, who rents an apartment with friends, should receive less than the father of three children. Thinking through your salary, don't forget their major expenses — food, rent, insurance. You have to ask yourself two key questions.

First, how much money you need for life outside work? Perhaps the company is your passion and you'll work around the clock even on weekends. But still, your salary should allow you from time to time to relax with friends or family.

Secondly, how long are you going to live on this money? If your savings is enough to set his salary below the market and to live thus in the course of the year, you will be able to preserve the capital of the company. Importantly, therefore, to observe the Golden mean — to appoint a not too little but not too much.

How many founders pay themselves?

Research company 80 000 Hours analyzed company accelerator Y Combinator and found that the minimum salary of the company's founders — $50,000 per year. If the company raised money venture Fund, this amount could double. But the majority of startups considered this amount excessive. Optimal called a salary from $50 000 to $75 000.

How much to pay employees

Ashish Advani, CEO of search service for investors, Covestor and founder of CircleLending, Virgin purchased

Count wages is more of an art than a science. It is difficult to focus on one universal solution: some companies work great when all the founders get the same, others feel worse and noticeable difference in income. What criteria to choose when calculating salaries?

— Salaries should not depend on experience — they should only be associated with work efficiency. For a start the obvious criterion for the formation of wages will be the real income, which was brought by a staff member. In rare cases, you can make an exception: if the employee is exceptionally well cope with its tasks, but has not yet brought the company money, you can invest in its future financial performance.

— Salaries should not focus on the average market salary — startups often pay 30 percent less than the average in the market.

— To save on salaries, there are a few tricks. First, it is possible to hire mothers with young children is the secret weapon of many startups. Young mothers spend too much time at home, they are bored and want to work, and many of them even have a good experience — but due to the flexible schedule they can provide the salary is two times lower.

— No need to cheat its employees deferred salary or exorbitant bonus, which will follow after a while. Do many companies — but it is better to assure their employees different: that their salary will increase proportionally to the success of the company. This is a lot more to encourage their work.

— No need to promise to its employees options or other intangible bonuses instead of their fair wage. You can't know whether your company ever profitable, so perhaps this is fair compensation. Other methods of promotion that are not associated with money, parties, corporate events and leisure and so on — in fact, cost much more than it would cost to raise. Despite the fact that staff enjoy a cocktail party, a sober assessment of whether you can actually now afford them.

— Use the labour of interns and volunteers — but in moderation. Often unpaid staff is the most logical solution in the early stages of a startup — and recent students to compete, to gain experience from you. Do not forget to think about motivation: you don't pay them, and they need to have other methods of control. Talk to the interns about their life goals, about what they want to achieve — and don't forget to meet with them from time to time to monitor their progress.

— Think about the possible income. What to do if you need to hire three people, but now have the money to pay a salary to only one? Figure out how to increase revenue, and the first to hire the person who will be able this income to increase in order to pay the salaries of the remaining two.

Source: theoryandpractice.ru