This is one of the questions every small business owner should be able to answer.
But most don’t.
Not because they’re lazy.
Not because they’re not serious.
Not because they don’t care.
But because nobody has ever shown them how to work it out properly.
So instead, they guess.
They look at the bank balance.
They pay the bills.
They wait to see what’s left.
And then, if there’s anything still sitting there at the end of the month, they might pay themselves a bit.
Or they might leave it in the business “just in case.”
Or they might take some money out and then feel guilty about it for the next three weeks.
And let’s be honest, that is no way to run a business.
Because “pay yourself what’s left” is not a business strategy.
It’s a fast route to frustration, resentment and wondering why on earth you started the thing in the first place.
If you want your business to pay you properly, you need to know what your business actually needs to make.
Not a vague number.
Not “more would be nice.”
Not “I just need a few more clients.”
An actual number.
Because if you don’t know the number, you can’t hit it.
Your Payday Should Be Built Into the Business
A lot of small business owners treat their own pay as the optional extra.
The business pays everyone else first.
The software gets paid.
The accountant gets paid.
The suppliers get paid.
The subscriptions get paid.
The networking memberships get paid.
The Canva Pro, Zoom, email platform, website hosting and random business tools all get paid.
And then the person running the whole thing gets whatever is left.
Which is often not very much.
That needs to change.
Your payday should not be a lucky accident.
It should be part of the plan.
And the way to do that is to build your numbers from the bottom up.
The Bottom-Up Model
Most people start at the top.
They say, “I want to make £5,000 a month,” or “I want a six-figure business,” or “I need more turnover.”
But turnover on its own does not tell you very much.
Because turnover is not the same as profit.
And profit is where payday lives.
So instead of starting with turnover, I want you to start with your pay.
Start at the bottom.
What do you want your business to pay you each month?
That is the starting point.
From there, we build upwards.
Step 1: Start With the Amount You Want to Get Paid
The bottom figure is your payday number.
This is the amount you want to take from your business each month.
Let’s say you want your business to pay you:
£3,000 per month
This is not the amount your business needs to make.
This is the amount you want to take home from the business.
And before you start talking yourself out of it, please remember this:
You are allowed to get paid.
You are not an optional extra.
You are the person making the whole business happen.
So choose a number.
It might not be your dream number straight away.
That’s fine.
Start with something realistic and build from there.
But you need a number.
Because without it, you are just hoping.
And hope is lovely, but it is not a pay strategy.
Step 2: Add Your Fixed Costs and Overheads
Next, you need to add your fixed costs or overheads.
These are the costs your business has to pay whether you sell one thing, ten things or nothing at all.
Things like:
website hosting
email marketing software
accountancy fees
insurance
phone
internet
memberships
subscriptions
rent or office costs
regular support
software
loan repayments
other monthly business costs
Let’s say your fixed costs are:
£1,500 per month
That means your business now needs enough profit to cover:
£3,000 personal pay + £1,500 fixed costs = £4,500
So, before we even think about variable costs or sales targets, your business needs to generate enough profit to cover £4,500.
This is where a lot of business owners have a little ta-da moment.
Because suddenly they realise they have not just been trying to make enough money to pay themselves.
They have also been trying to cover all the costs of running the business.
And those costs matter.
Step 3: Work Out the Net Profit You Need to Make
The next figure is the net profit you need.
For this simple model, I’m using this as the amount your business needs to have left after direct costs, so it can cover your fixed costs and your pay.
In our example, that number is:
£4,500 per month
That is the amount the business needs to create before your monthly overheads and your own pay are covered.
Now, this is not about making the numbers scary.
This is about making them useful.
Because once you know the number, you can start making proper decisions.
You can look at your pricing.
You can look at your offers.
You can look at your costs.
You can look at how many clients or sales you need.
You stop guessing.
And that is when things start to change.
Step 4: Add Your Variable Costs or Cost of Sales
Next, you need to think about your variable costs or cost of sales.
These are the costs linked directly to delivering what you sell.
For example:
materials
stock
printing
payment processing fees
freelance delivery support
venue costs
delivery costs
affiliate fees
commission
packaging
other costs that only happen when you make a sale
If you sell a product, your variable costs may be the cost of making, buying, packing and posting that product.
If you sell a service, your variable costs may be smaller, but they still might exist.
For example, if you run workshops, you may have room hire, refreshments, workbooks or guest speakers.
If you deliver client work, you may have subcontractors, tools or resources linked to delivery.
Let’s say your variable costs are around:
£1,500 per month
Now we add that to the net profit figure.
£4,500 net profit needed + £1,500 variable costs = £6,000 gross profit or sales required
In this simple model, that means the business needs to bring in around £6,000 per month to cover the variable costs, the overheads and your desired pay.
Now you have a target that actually means something.
Not just “I need more money.”
But:
My business needs to generate £6,000 per month so I can pay myself £3,000 and cover the costs of running the business.
That is much more useful.
Step 5: Know Your Average Order Value
Next, you need to know your average order value.
This is the average amount a customer spends with you.
If you sell services, it might be the average value of a client booking, package or project.
If you sell products, it might be the average order in your shop.
If you sell memberships, it might be the average monthly or annual value of a member.
Let’s say your average order value is:
£500
Now you can work out how many customers you need.
Step 6: Work Out How Many Customers You Need
This is where the model becomes really useful.
If your business needs to generate £6,000 per month and your average order value is £500, you divide:
£6,000 ÷ £500 = 12 customers
So in this example, you need:
12 customers per month
Not “more clients.”
Not “a few more sales.”
Not “I need to post more and hope.”
You need 12 customers at an average order value of £500 to generate the sales needed to support your desired pay and costs.
And now you have something to work with.
Because if 12 customers feels too many, you can look at increasing your average order value.
If £500 feels too low, you can look at your pricing or packages.
If your variable costs are too high, you can look at your margins.
If your fixed costs are too high, you can review what you are spending.
If your pay goal feels too far away, you can create a stepping-stone payday and build from there.
This is why the numbers matter.
They give you options.
The Bottom-Up Model in Simple Terms
Here’s the model:
| Level | What you work out |
|---|---|
| 7 | Number of customers needed |
| 6 | Your average order value |
| 5 | The gross profit your business needs |
| 4 | Your variable costs or cost of sales |
| 3 | The net profit or sales required |
| 2 | Fixed costs or Overheads |
| 1 | Your Salary |
And here’s the example:
| Level | Example |
| Number of customers | 12 |
| Average order value | £500 |
| Net profit needed | £6,000 |
| Variable costs / cost of sales | £1,500 |
| Net profit / sales required | £4,500 |
| Fixed Costs/Overheads | £1,500 |
| Your salary | £3,000 |
This is not about creating a perfect financial forecast.
It is about giving you a clear target.
A number you can understand.
A number you can build towards.
A number that helps you make better decisions.
Why This Matters
When you don’t know how much your business needs to make, you end up making decisions based on feelings.
You feel like you need more clients.
You feel like your prices might be too low.
You feel like your costs might be too high.
You feel like you should be doing more marketing.
You feel like the business should be further ahead.
But feelings are not facts.
And they are not especially helpful when you are trying to pay yourself.
The Bottom-Up Model helps you replace panic with a plan.
It helps you see what the business actually needs.
It helps you stop chasing turnover for the sake of it.
It helps you build your pay into the business properly.
Because a business that pays everyone else but not you is not the dream.
Your Numbers Might Show You Something Important
When you work through this model, you may realise a few things.
You may realise your prices are too low.
You may realise your average order value needs to increase.
You may realise your costs are too high.
You may realise you need more customers than your current marketing can realistically bring in.
You may realise your offer takes too much time for the money it brings in.
You may realise you have been aiming for turnover without understanding the profit underneath it.
And yes, some of those realisations may be slightly uncomfortable.
But they are useful.
Because once you can see what is happening, you can do something about it.
That is what I call Figures Without Fear.
The numbers are not there to judge you.
They are there to guide you.
You Don’t Have to Hit the Big Number Straight Away
Now, before you look at your number and decide to lie down in a dark room, please remember this.
You do not have to get there overnight.
If your dream payday is £3,000 per month but you are currently paying yourself £500, start there.
Then build to £750.
Then £1,000.
Then £1,500.
The point is not to beat yourself up.
The point is to stop guessing and start building.
Because once you know what your business needs to make, you can create a proper plan.
You can work out what to sell.
You can improve your pricing.
You can focus your marketing.
You can review your costs.
You can build your confidence around taking money out of the business.
You can make payday part of the way the business works.
Stop Asking “Can I Afford to Pay Myself?”
I want you to stop asking:
“Can I afford to pay myself?”
And start asking:
“What does my business need to make so that paying myself is part of the plan?”
That is a very different question.
One keeps you waiting at the back of the queue.
The other puts your payday into the business model.
And that is where the shift happens.
Because you are not an optional extra in your business.
You are not the person who gets whatever is left.
You are the business owner.
And your business needs to support you too.
Need Help Working This Out?
If you are not sure how much your business needs to make before you can pay yourself properly, I can help you work it out.
I have a page all about how to pay yourself from your business, where I explain why your payday needs to be part of the plan, not something you hope happens at the end of the month.
Because this does not need to be complicated.
You need to know:
what you want to be paid
what your business costs
what profit you need
what you need to sell
how many customers you need
what needs to change next
No scary number nonsense.
No judgement.
Just a simple way to understand what your business needs to do so that it can pay you properly.
Final Thought
Your business does not need a random turnover goal.
It needs a payday plan.
Start at the bottom.
Work upwards.
Know your number.
Then build the business model to support it.
Because more turnover is not the answer if the money still does not reach you.
Profit is where payday lives.
And your payday deserves to be part of the plan.
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