When should bootstrappers pay themselves?

When you are building a business from scratch, it is easy to put off paying yourself. You tell yourself that every dollar should be reinvested, that you will take something “once the business can afford it”. The problem is that this moment rarely arrives unless you plan for it.

Many bootstrappers end up working for free for months or years, draining their savings and losing momentum.

In Episode 24 of Our B2B SaaS Journey, Gavin and I decided it was time to stop avoiding the question: how much should we actually pay ourselves?

Why paying yourself matters

If you don't account for your own pay from the start, your business may look successful on paper while your personal finances collapse in the background.

Paying yourself:

• Prevents burnout and resentment
• Creates urgency to grow revenue
• Forces disciplined budgeting
• Keeps your business sustainable for the long haul

The Profit First approach

We borrowed from Profit First by Mike Michalowicz. The book flips the usual formula.

Instead of:

Revenue - Expenses = Profit

You work with:

Revenue - Profit = Expenses

In practice, this means you skim your agreed amount the moment revenue lands, and then run the business on what is left.

It is a mindset shift from “I get paid if there is anything left” to “I get paid, and then I make the business work within the remaining budget.”

Our 40/40/20 split

After some back and forth, we decided this for all future revenue:

• 40% - Salaries (split equally between Gavin and I for now)
• 40% - Business expenses (software, infrastructure, marketing, accounting)
• 20% - Taxes (GST and company tax provisions)

We have capped our salaries for now. This is not about pulling 40% forever - once we each hit a comfortable amount to work full time, the salary percentage will shrink to make space for other team members.

How this helps us make better decisions

1. Hiring discipline
   If the salary bucket is maxed out, we cannot afford another hire. The numbers make the decision for us.\
2. Built-in sustainability
   Paying ourselves ensures we can focus fully on the business without relying on side income.\
3. Clear financial guardrails
   We know exactly what we can spend each month without drifting into “just this once” overspending.

How you can apply this

If you are bootstrapping:

1. Decide on a realistic percentage for your pay based on your current revenue.
2. Cap it so you protect cash flow.
3. Automate the transfer into a separate account as soon as revenue arrives.
4. Review your split regularly as revenue and needs change.

Paying yourself is not selfish - it is a survival strategy. If you want to give your business the best chance of success, make founder pay a fixed part of your budget from the very first dollar.