How business owners can take action to protect their income from the recession

It can sometimes be difficult for business owners to pay themselves, especially during an economic crisis. You may be faced with sporadic income levels in your business, and it can be difficult to estimate how much income you will generate from month to month.

Stacy Tuschl is a high performance coach and business mentor, and founder of The Foot Traffic Formula which helps motivated entrepreneurs meet their challenges, realize their highest potential and build self-sustaining businesses. Stacy works with many CEOs who earn little or no pay during the first few years of running a business.

Conversely, some entrepreneurs appropriate too much of the company’s income, which makes it difficult for the business to grow.

The scenario of the underpaid and overworked entrepreneur is often the case with many. Figuring out how to pay you can be overwhelming for some business owners when income can be unpredictable. But you still have to pay yourself to meet your personal financial obligations like rent / mortgage, food, utilities, and other required bills.

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It is wise to be proactive and plan for uncertain economic times. Here are some of the strategies Stacy recommends to follow:

1. Determine the salary you need to live

Every business owner has personal expenses that need to be paid for, so you need to earn income to cover those expenses. Plan for these expenses and plan your salary. Your salary should be a priority to pay and include in your business financial planning.

The most common ways to pay yourself a salary through your business are through an owner’s raffle or a salary. According to NerdWallet, the owner’s raffle is best for people registered as a sole proprietorship, partnership, or LLC. A salary is generally best for corporations or LLC corporation taxes as a corporation.

Consult with your tax accountant for expert advice and the best tax strategy and savings for you.

2. Diversify your income

Having more than one income stream can protect your business. One of the most effective income diversification strategies recommended by Stacy is to include digital offerings in your business, even if you are a brick and mortar.

Create digital offerings such as self-paced lessons, downloadable resources, membership sites, and more. is easier than ever. A simple sales funnel (the customer journey from cold prospect to paying customer) can be automated online and is the key to generating consistent leads and income.

Joining affiliate programs is another way to genuinely promote the products you already use and love, adding another source of income to your business income stream. When you are affiliated with another product or service and promote it to your network, you may earn a commission on that sale.

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3. Build up your cash reserve

When you build your safety net, you can have a cash reserve you can rely on when the money isn’t coming in as securely as it needs to. There are always ups and downs in a business, and preparing for the downs will help you get through the toughest times, keep your business running, and meet your financial obligations.

Ultimately, it is essential to develop a sustainable and profitable business that allows you to live comfortably and enjoy the benefits of entrepreneurship. Putting these pillars in place to protect your income will put your best foot on the entrepreneurial path, being everything you hoped it would be.

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