The Informed Founder Salary
A framework for understanding when you are financially free or in other words living by the 4% rule.
Image by Ashley Etling,
“Because everything is better with good good, especially financials.”
We move our own line down on payroll, again and again, and hit save before we can second guess it. Every founder who has done this knows the reasoning. This is temporary. This is an investment. The pay we skip now is pay we buy back later, with interest.
That trade does not always work out the way we hope. But it does not have to be left to hope either. It can be designed.
Paying yourself is not optional. It is a fact of running a company, whatever the number turns out to be. The real question, the one worth spending time on, is how much, and by what math. There are dozens of good models for figuring this out, and most founders never build one for themselves.
Diane Loviglio recently wrote a piece called When Are You Financially Free, using the classic 4% rule, the idea that you are financially free once your investments can safely cover a certain amount of years of spending, and turning it into a clear number instead of a vague someday. Neither Diane nor I are financial advisors. We are both people who like a model that gives you something concrete to work from.
That article is worth reading on its own. It also points to something bigger. Founders do not have to wait on a big exit to know where they stand. You can take your real salary history, whatever shape it has taken, and run it through a model like this to see what it adds up to on its own, with no acquisition required.
That is the shift worth aiming for. Instead of treating an exit as the plan and your salary as a placeholder, treat your salary as the plan, and let any exit be the bonus on top of it.
That is the model worth building next, for any founder ready to stop guessing and start designing. Email me for the scrappy one I built. If you are working on your own version, I would love to compare notes. And for anyone who would love help building yours, a session with Diane is worth it.
Written and edited by Ashley Etling
I help companies of all sizes grow, prosper and enjoy. Beyond that you can find me enjoying food, wine and travel with friends and family. Remember you do not to have an answer before reaching out. It is as simple as a hello.