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Business Profit Maximizer #4 - How Much Should You Pay Yourself as a Business Owner - Dan Lok - YouTube
Channel: Dan Lok
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profit maximizer number for his key very
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important you must get on a compensation
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right to know what your true pre-tax
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profit is this is applies to most small
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business owner they have this illusion
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you must get owner compensation right to
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know what your true pre-tax profit is
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because you are not your business we
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paid after me I am not my business you
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are an employee within your company
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you're a CEO you could be a VP of Sales
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but you employee within you your company
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is a separate identity separate identity
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yes it's different it's different
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so most entrepreneurs UNMISS understand
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the relationship between their salary
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and then we turn what they own here's
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what I mean they think in terms of I
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don't know why Ryan you've seen this a
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lot right like most most business owners
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somehow their salary is $36,000 a year
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right why is that give him like why is
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that Mike how often you see that 36
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grand a year somehow that's a is a good
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question because they think 36 because
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they want to minimize the amount of tax
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they pay right so so for years they were
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I'll just do 36 grand but that's a false
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assumption because as your company grows
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is what happens you couldn't find
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someone to do what you do for 36 grand a
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year
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you couldn't for everything that you do
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you do yes
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nope you will not be able to find
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someone to do that so so you are paying
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yourself below market wage and gives you
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the false assumption that your business
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is okay it is not okay because you so if
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you think of how much would you want
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you've actually so imagine this actually
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have a question so you get pay a salary
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for what you do you get a return for
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what on what you own so expand on that
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so it's a salary I'm paying myself as a
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CEO all right but also as a business
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what's my profit what's the return as a
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shareholder to different roles
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yep dividends yep yeah perfect so two
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different roles you're getting it two
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different things so first thing you guys
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think if you got to pay yourself a
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market rate wage market rate wage okay
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because in some point if you want to
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replace yourself and they have someone
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coming into business to run the business
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you need to pay them a fair salary but
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if you can keep paying thirty six square
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36 clinics you're not gonna find
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somebody and it gives you the false
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illusion that your business well I guess
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it's okay it's not okay
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how come somebody SEOs paid you of
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themselves at all a year but for what we
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do for what we do to give yourself the
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accurate picture of what's going on do
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that does that make sense yeah so most
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shows per nurse think they're overpaying
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themselves but at least what I believe
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from my experience ninety percent are
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under paying themselves they're not
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paying themselves enough they're not
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paying themselves enough to think 36
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grand not not enough so let me ask you
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how much would you want to pay yourself
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to see all the lumber how much would you
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think it's a fair compensation for
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yourself hmm
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600 G yes 600 G G is good nothing wrong
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with that yes yeah in a year how much is
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or monthly doesn't matter twenty-seven
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million year okay good nothing wrong
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with that
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no seriously for what you do how men for
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yourself a million dollar yes
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you know hundred grand a year by the
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profit more than that good but as an
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employee is a hundred grand you think
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right so what's your point where you
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know maybe you can bring someone to
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replace you - yeah maybe a CEO or
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something and pay them that hundred
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grand so they could run right so then
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you get out as a shareholder you're
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getting getting a dividends getting a
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profit right that's what I'm saying you
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got to get you compensation right so
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here's a good question if you got run by
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a bus today it's very depressing
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question today but it's to make you what
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think yes and your family decided that
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it would keep the business going in your
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absence what would they have to pay for
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someone to do your job what would they
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have to pay for someone to do your job
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and it's gonna be way more than 36 grand
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partly more than 50 grand right maybe
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more than maybe it's 80 Grammys a
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hundred grand is a 200 grand
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whatever numbers you have in your mind
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but know that number and get the
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compensation right a business is like a
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cow of a saying until you pay yourself a
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market-based rate wage and make a profit
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on top of that you have a sick cow on
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your hands until you pay yourself a
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market base rate wage and make a profit
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on top of that and you have a sick cow
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on your hands and for some of you I know
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what I'm saying tonight makes you a
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little uncomfortable and uneasy and
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that's awesome because then it
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means you might do something about it
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now looking a business thinking is
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healthier than you think
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when you should have a sick cow in your
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hand how many of you going through some
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of these numbers thinking about your
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business now you're going back and
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you're looking at this realize you need
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to make a lot more profit you make a lot
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more profit than you think a lot more
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than you think yeah so don't focus so
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hard on not paying taxes focus instead
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on increasing your profits that's the
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main lesson that many years ago I talked
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to my mentor dan Pena and I stand an you
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know I'm making more money I'm paying
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more taxes you know I feel like I'm
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writing some big checks man to Revenue
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Canada and then looked at me and said
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you know kid if you're worried how much
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taxes you're paying in making enough
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money
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if you wear how much taxes you're paying
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in making enough money some truth to
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that ten times your finances ten times
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your business ten times your marketing
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ten times your life hit the subscribe
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button now
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