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How Do I Pay Employees?

Craig Investigate what the going rate is in your area for the type of position, and get three separate sources to confirm the data, not just one.

The best pay system is rewarding production, thus the staff have an incentive to produce. The worst case is “no rewards,” but “high pay.” You and the staff will lose and without the correct level of production, no one gets paid.

Your pay system also has to fit within your budget and your pay needs to be a percentage of your income, which should never exceed 50%. This 50% has to also include the salary you are taking as an owner, not your profit or anything inflated, but what you would be paying someone else to do the job you are doing. It also has to include all taxes and benefits.

You will notice that if you get above 50% there is not enough funds for expansion and correct profit margins. In summary, low base with great bonuses work, but you also have to factor in that the “great bonuses” have to be paid out of money in the door; meaning they too are in the budget or it comes out of profits.

What you never do is borrow money to pay bonuses! What would be the point of that?

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