How long do founders have to wait to take a salary when launching a startup?

Author Topic: How long do founders have to wait to take a salary when launching a startup?  (Read 2209 times)

Offline roman

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Experience sharing of Mr. Raj Khera
Co-Founder/CEO of 2 SaaS companies acquired by public firmsMay 4, 2018

Here’s what happened to him:

-First company: quit my day job on a Friday, proposed to my then girlfriend on Sunday (now wife for over 20 years), got married 8 months later, returned from honeymoon only to find my bank account overdrawn. Really worked very hard to bring in cash flow and finally started taking a salary after about a year from the time I quit my day job.

-Second company: I had savings from the sale of my first company. This time I had a better sense of how to build cash flow faster so my partners and I were able to draw a salary in about 8 months. We could have drawn sooner but we were reinvesting into growing the business, including hiring staff.

Third company: cash flow positive within 2 months, but partners and I chose to reinvest all cash back into the company so we didn’t take a salary. We ended up growing it and selling the company, without ever having taken a salary.

Main point: draw the salary you need to survive. Invest the rest for growth. Once you’re stable and growing, you can explore increasing your salary.

Other suggestions:

Keep 6 months of cash on hand if you can. At first, this will probably be your personal savings. Later, it will be your company’s savings or line of credit. You never know when the wind could blow in the wrong direction.
If you get outside investment to start your company, don’t take a big salary. Investors don’t want to see their money going directly into your pocket.

Md. Rokanuzzaman Roman
Assistant Registrar &
SA to Honorable Chairman, BoT
Daffodil International University