Salary sacrifice: Founders forgo income and sleep this festive season
The festive rush may be upon us, but Australian business owners say ’tis the season for sacrificing their own salaries.
“I see that as a very conscious choice of investing in business, and one I’m very comfortable with,” says founder of kids’ book printing brand Littlescribe, Jenny Atkinson.
Atkinson has recently launched her business, which lets school kids write and design their own books to get printed, but says she expects to have a period of not paying herself in order to get Littlescribe off the ground.
“I understand the choices I’m making. I’m very good at living with them for a period of time — it’s easy, to go without a new outfit and my hair being done,” she says.
While it’s too early in the company’s life to know what annual revenues will look like, Atkinson plans to invest “more than a principal’s salary” in the business and has a long-term vision for the company.
But she’s not alone in saying you can’t run a business at this time of year without sacrificing everything from sleep to festive family time and income.
A Westpac survey of 500 small business owners conducted with Deloitte this month reveals in order to maintain manageable cashflow, more than half of Australian founders are cutting back in areas of their own lives.
More than 50 per cent say they won’t have time for end-of-year celebrations with family and friends, while 58 per cent said they were guaranteed to miss sleep between now and the end of the year.
Thirty-four percent of female founders said they’d forgo salary to pay their staff, while 27 per cent of male founders agreed.
That consideration is a live one for many established businesses, with 57 per cent of founders surveyed saying their costs are going up even as inflation remains low.
Chasing long-term profits
“The number of businesses saying they continue to grow their top line is quite large — anecdotally, it would be two thirds,” says Westpac Group’s general manager of SME banking, Ganesh Chandrasekkar.
“But most of them feel like that is not translating down to the profit line. Energy costs are a big issue, and commercial rents and payments costs,” he says.
The time and cost crunch is one of the reasons the big four bank says it has invested in developing its “Biz Invoice” product, which lets business owners invoice and chase payments from the same portal as their bank accounts.
With decades of experience in business under his belt, Burger Love co-founder Steve Agi says the cost and regulation pressures of running a company through the end of year rush have always been there.
“I’ve been through the wars three decades, i understand not everything is going to be rosy,” Agi says.
The Melbourne burger chain turns over around $10 million a year, but like Atkinson, Agi says he makes regularly cuts to his own business income.
“I might go six months without taking a dollar from any of the stores,” he says.
“It is extremely stressful, but you make peace with it because you have an exit strategy and there’s a plan to get to a certain point.”
But with the Westpac research indicating business owners will spend around 12 hours each week doing paperwork at this time of year, Agi says there could be a bit of streamlining in business processes.
“I don’t mean it in a negative way, but it is a challenge to cope with all the regulations, from liquor licensing to food safety to superannuation. There are so many different portals that need attention.”