Why You Need To Pay Yourself As a Fashion Business Owner

When you first start a new business, money is tight and there are so many things vying for those dollars – a website, product development, photoshoot, materials and production, taxes. At the end of the day, it is hard to find any funds left over to write yourself a paycheck as the business owner. “I just need to invest in my business until it gets to x, y, z point, and then I’ll pay myself” you say to yourself. Many business owners fund their startups with their time and passion in the beginning – and sometimes this is necessary, but I want to make the case for why paying yourself as the business owner will benefit your business in the long run. 

First off, let’s start with mindset. When you run a small business, you are the boss making the decisions and setting the strategic plan for your business, but you are often also the employee who is involved in making the product and implementing the plan. It is sometimes hard to separate the two roles when you are the one wearing all the hats. In order to have a healthy business, though, you need to fully understand your costs – not just the cost of your goods, but the cost of running the business. This includes the salaries of your employees. If it is just you and you haven’t actually hired a team, that still means your salary as an employee is still a cost to the business. Another way to think of this is that your time is not free. If you had to pay someone to do the things you do for your brand, what would that cost? 

If I’ve convinced you that the salary of employee-you is a cost to business-owner-you, then you’ll probably realize that paying yourself a salary of $0 is making your overall cost of doing business (or making your product) artificially low. “But why does that matter – I’m saving money by doing it myself,” you may ask. It matters because without realizing it, you may be operating at a loss. You’ll get to a point when your business has grown enough that you need someone else to help you, but you don’t have the money to hire someone. The prices you set based on your free labor don’t leave any room to hire help. If you don’t factor in the cost of the work you do for your business from the beginning, then all your pricing and costing will be off. 

I’m not saying that you can’t start your business until you have enough money to pay yourself a full salary, but I am saying to factor the cost of what you do in your business into your costing. If you are the one sewing the dresses for your brand, calculate how much time they take you and how much it would cost to hire someone to do that and factor in that labor cost into the final price you set for that dress. If you choose to invest what you would pay yourself to make the dress back into your business at the beginning, that is fine, but don’t just put that cost as $0. 

I think part of being a sustainable brand is making sure it has healthy finances and business operations so that it can last. Just like sustainable fashion that we design to be loved for the long run, a sustainable business should be designed for longevity as well. You would never expect an employee to work long hours for zero pay year after year for your business, so why do you think you need to do that? If you find yourself in this situation, you need to take that up with the boss – which as a small business owner, is you. This is why I think you should actually pay yourself money as the business owner as soon as you can. It makes the business and your lifestyle more sustainable for the long run.

The bottom line is that paying yourself (or at least costing as if you’re paying yourself) puts you in the mindset and your business in the position to be ready to grow into a healthy, sustainable brand. And just because you love working in your fashion business, doesn’t mean you should be doing it for free. 

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