Growth / Clate's Corner

Take-home Pay vs. Payroll Stage by Stage

Clate Mask

Updated: May 06, 2020 · 3 min read

Toolkit for download in this article

piggy bank with cash

OK, so my post about take-home pay vs. payroll struck a nerve. I received some questions about it and decided to do a post about each stage of SBS because the way to deal with this issue is very stage-specific.

If you’re in stage one, you’re asking yourself the terrifying question, “Should I hire my first employee?”  You know that will mean a hit to your own take-home pay. You’re worried whether you can afford it, but you’re buried in work and the thought of having someone help you is mesmerizing. But, then the thought of taking on that extra responsibility jolts you back into reality.

Ahhhh, what to do? Here are a few suggestions:

  • Identify your strengths and weaknesses with the ICE exercise. Write out all of the stuff you do.  Dump it out of your brain; make a long, exhaustive list. Then, write an “I” next to each activity you do incompetently. Write a “C” next to each activity you do competently. And write an “E” next to each activity where you are excellent. (I first learned a version of this exercise from Dan Sullivan of Strategic Coach).
  • Evaluate how important each activity is. Mark each activity with a High, Medium or Low designation, based on what’s important to increase your sales. Of course, this includes providing good products and services, so don’t get too narrowly focused on sales and marketing tasks. On the other hand, don’t kid yourself into thinking the new logo design or bookkeeping work is highly important. You’re looking for stuff that has a direct, speedy impact on cash.
  • Now identify the stuff that’s highly important where you are incompetent. This is the stuff that makes most sense for you to give to a hired hand. By the way, you should also use this list to take not of what you do well and stick to it. The real trick is to gradually delegate and stop doing all the stuff that’s not an E and eventually only do the stuff that’s “High E.”
  • Consider project work or part-time employment before hiring. I strongly recommend contractors or part-time employees before taking the plunge to hire a full-time employee. You keep the risk down, you get a hungrier team member and you both get to “date” each other before sealing the deal.
  • Finally, can you afford it? The average Solopreneur in the United States is generating $47,000 in annual sales. If you’re below that number (about $4k per month), you should either have savings to support you or a very low cost of living--and a willingness to keep it that way. As you grow your business, you want to consistently increase the annual revenue per employee (Fortune 500 companies are at about $500,000 revenue employee, while seven-figure businesses are usually above $100,000 in revenue per employee).


These steps will help ease you into that first, all-important hire. It’s always a little scary when you become a New Employer. But if you follow these steps, your likelihood of success in stages one and two will go up significantly.

SBS Idea of the Day: Do an ICE exercise, no matter what stage of business you’re in. It always reveals some inefficiency and ineffectiveness in your workload.


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