You Have Not Taken a Paycheck in How Long? Let's Review the Situation

I hear this all the time, small business owners who have not taken a paycheck in a year, two years. Today I heard 5 years. I ask a simple question, what's the point?

There are a few acceptable reasons one works a small business and does not take a paycheck.

1. Temporary cash flow issues, it happens and sometimes the owner needs to forgo his check. Ok as long as it really is temporary, how long is temporary before it becomes a problem. That's a personal decision, depends on the magnitude of the issue, how long and what the projections say. If it is truly a momentary speed bumps then not a problem...

2. You are a start up and in the ramping up period, another situation where it may be ok, but for how long I ask?

The point is, business is not a hobby. Business is a commitment to turn a profit and, thus, certainly everyone must get paid including the owner manager.

If you are not getting a weekly paycheck then I ask what the point is. If the answer is 1 or 2 above then ok, if anything else then check it out, your ego is in control and you are willing to sacrifice yourself and your family for no good reason.

Here are a few typical excuses:

1. My employees need the job.

2. I am committed and do not give up.

3. I have everything I have invested in this I have to make it work.

4. I have nothing else I can do.

5. I believe in it (whatever that means). I know it will work eventually.

6. I owe too much to stop now, I will never be able to pay the bank off and my house is at risk.

These are six excuses that make little sense.

Not taking a check appears to be a noble gesture, self sacrifice for the benefit of others; a demonstrated commitment. A never give up attitude, which has its place but not here.

In reality it demonstrates a business plan that is not working. Inadequate capitalization or an intervening influence has thrown you off course. For whatever reason it may be, it is only a business and is hardly worth sacrificing yourself and your family's needs because your ego is controlling you and you do not want to give up. The problem here is that for the most part in a different situation you would be demonstrating high quality character. However in a small business environment, this is pointless ego-controlled self destruction. Ask your wife who is probably supporting you and your family while you waste your time fighting a war you cannot win and while not taking a paycheck and pretending all is ok.

All is not ok.

If you undercapitalized your start up, or miscalculated your acquisition, or if it is not working for whatever reason you may have, it is terminal in nature, kill it as soon as you are clear that you cannot succeed. One way to determine this is if you cannot take a paycheck, that s a sure fire indication the plan is deficient. Stop wasting your time and capital and move on.

You must know when to fold your cards, it s an important skill and requirement. You do not have to play out a losing hand.

Do the debt workout, say goodbye to the lost capital, and start again with a different plan, one that may work.

Stop punishing your family by not taking a paycheck under the guise that you are doing the right thing. You are not.