How to Pay Yourself as a Founder
This post is AI-generated from podcast episode 18. Check it out!
Hey friends! Today, I want to tackle one of the biggest questions I hear from founders: how do you pay yourself?
This topic sits right at the intersection of staffing and budgeting. The truth is, you really can’t create a solid budget until you know your staffing plan. That’s why I always recommend starting with at least a three-year vision for your program.
Why three years? Because if you just focus on year one—getting your doors open, wearing all the hats, working your tail off—you might end up underpaying yourself or working for free. And then, a year in, when your program is growing or demand spikes, you could face a situation where you either have to scramble for funds or suddenly raise tuition..or keep working for free and getting burned out.
Parents and families don’t love surprises when it comes to tuition. A moderate adjustment is usually okay if you’re transparent, but significant surprises? Best to avoid.
Step 1: Start With Your Vision
Before you even think about numbers, you need a clear picture of what your program is going to look like:
Year 1: What’s realistic for your first year?
Year 3 or 5: What does full growth look like?
For example, maybe you want two classes of 25 kids total—pre-K and K. Year one could just be starting with the pre-K class and 10 kids. By year three, you might have both pre-K and K running fully.
Or, if your plan is aggressive growth—starting with a couple of grades and adding more each year—you’ll need to plan for more staff, supervisors, and infrastructure as you scale.
The key is this: don’t underestimate what growth will cost, and make sure your staffing plan can sustain it.
Step 2: Build Your Budget Around Staffing
Once you know your staffing needs, you can create a detailed budget. Include:
Rent and utilities (get real quotes!)
Staff salaries and benefits
Administrative support
Supplies, curriculum, and other operational costs
And yes, you are part of the staff. Don’t leave yourself out of the budget. Think about the role you’re playing. Would you hire someone to do what you do? What would you pay them fairly for your skills and experience? That’s your number.
Remember, you’ll also need to factor in taxes, workers’ comp, and insurance, which can add up to around 10% of your payroll.
Step 3: Work Backward to Set Tuition
Once your budget is solid, figure out your cost per child. If you’re a nonprofit, you may factor in fundraising to cover the gap between tuition and actual costs, but you still need to know what the cost per child is. Starting with a tuition that covers all expenses ensures that your program is sustainable and not reliant on just your good will and sweat equity.
Step 4: Pay Yourself Fairly
As a founder, the first year—or even the first two—you may not be able to pay yourself a full market wage. That’s part of the entrepreneurial sacrifice. But:
Set a realistic number for your role for the long run
Include it in the budget as if you were hiring someone else to do the work
Think of it like hiring a consultant for your planning and strategy work if there are some tasks/hours that are temporary
If you’re one of the teachers or the director, apply the same principle: what would you pay a fair, competitive wage for that role? For part-time hybrid programs, you’ll often pay a percentage of a full-time equivalent, based on hours worked and responsibility.
Step 5: Think Long-Term Sustainability
Your goal is a program that can thrive without relying on your personal goodwill forever. Every position should be accounted for, funded properly, and sustainable as the program grows. Eventually, as your program matures, your “entrepreneurial strategist” role—doing all the planning, budgeting, and oversight—will scale back. At that point, you’ll be focusing on supervising the program, with less of the early heavy lifting.
Key Takeaways
Start with your vision: Know what your first year and your three-to-five-year plan looks like.
Plan your staff carefully: Map out every role and what it costs.
Include yourself in the budget: Know your worth and make sure you’re compensated fairly.
Work backward to set tuition: Budget first, then tuition. Don’t guess what people will pay.
Plan for sustainability: Build a program that can grow and thrive without burning anyone out.
Paying yourself isn’t just about money—it’s about building a program that lasts. Get your staffing and budget in order first, and everything else falls into place.
