Know Your Numbers: The Key to Paying Yourself What You Deserve

“If you don’t know your numbers, everyone gets paid but you.”

This statement, spoken by Daymond John during a small gathering of business owners, hit me hard. I wrote it down, double-underlined it, and circled it in my notes because it reflects a reality many business owners face.

Most of us don’t take on the risks of entrepreneurship just to end up paying ourselves whatever scraps are left over. But without a clear understanding of your numbers, this is exactly what happens.

Knowing your numbers ensures you, the owner, are able to achieve the financial success you set out to accomplish. Let’s break it down and solve for a few key figures that will help your business support paying you what you need, want, and deserve!

Step 1: What Do You Need to Support Yourself?

Start by calculating how much money you need to support your personal expenses each month.

• Your Needs: List your monthly expenses to determine the minimum amount you need.

• Your Wants: Dream a little—how much do you want to make to enjoy the lifestyle you’ve envisioned?

Multiply your monthly need by 12 to get an annual figure. This is your baseline goal.

Step 2: What Is Your Average Deal Profit?

Next, identify the average profit you make from each deal, or if you’re building a rental portfolio, calculate your average cash flow per unit.

For example:

• If you’re a real estate agent, this could be your commission per transaction.

• If you’re a landlord, it’s the cash flow each rental unit brings in monthly.

Step 3: What Percentage of Profit Are You Paying Yourself?

The percentage of profit you pay yourself depends on where you are in your business journey:

• If you’re a startup handling everything yourself, you might be paying yourself most of the profit.

• If you have a more mature business with employees, this percentage might be lower to cover additional expenses.

Step 4: Solve for Your Business Goal

Once you have the above numbers, calculate what your business needs to generate monthly to support your desired pay.

Formula:
Monthly Need÷Percentage Paid to You=Business Goal\text{Monthly Need} \div \text{Percentage Paid to You} = \text{Business Goal}Monthly Need÷Percentage Paid to You=Business Goal

Example:

• Monthly Need = $10,000

• Percentage Paid to You = 40%

• Business Goal = $10,000 ÷ 40% = $25,000

Your business must generate $25,000 per month to meet your financial needs.

Step 5: Solve for the Number of Deals or Units

Now that you know your business goal, determine how many deals or rental units you need to hit this target.

Formula:
Business Goal÷Average Deal Profit=Number of Deals or Units\text{Business Goal} \div \text{Average Deal Profit} = \text{Number of Deals or Units}Business Goal÷Average Deal Profit=Number of Deals or Units

Example:

• Business Goal = $25,000

• Average Deal Profit = $12,000

• Number of Deals = $25,000 ÷ $12,000 = 2.1 deals/month (approximately 25 deals/year)

Why Knowing Your Numbers Matters

When you have clarity about your financial goals and the numbers behind them, you can work toward improving them. Maybe you increase your average deal profit, boost your cash flow per unit, or adjust your pay percentage as your business grows.

These numbers provide a clear roadmap for achieving the lifestyle you want while ensuring your business operates sustainably.

Time to Pay Yourself 💯

If you’ve been paying yourself the bare minimum, it’s time to change that narrative. Use these steps to take control of your finances, set achievable goals, and work toward a future where you’re not just surviving—you’re thriving.

You deserve to reap the rewards of your hard work. Now, let’s make it happen!