What do you want to earn in that first year in business and thereafter?

I wonder how many of us would join a company without knowing our salary and on target earnings. Not many I guess.

When I ask people when they are thinking of setting up a business what they want to earn in their first year that simple question sometimes seems to confuse them.

I get answers like:

• As much as I can
• Between £50k and £100k
• I’ve not really thought about it

People don’t really understand, particularly if they’ve not been in busienss before, what they should be targeting.

Fail to plan and you plan to fail

They should be planning and looking for three basic things from the proposed business and they are: (1) salary; (2) dividend and (3) an exit route.

• Salary = Monetary subsistence level required in year one; more later.
• Dividend = If everything goes okay what extra cash you get from the business plan if things work out.
• Exit route = What the business could be worth when you want to get out of it or when you hand back your dinner plate.

If the business cannot realistically provide these three things then please don’t waste your time instead contact me for better suggestions.