Under paying myself
I’ve started reading quite an interesting book by Greg Crabtree called Simple Numbers, Straight Talk, Big Profits and the very first chapter in that book he talks about entrepreneurs habitually under paying themselves in the false belief that it leads to healthier perception of profits, but he proves that thought is a simple and very dangerous fallacy as it misrepresents a company’s true profitability as the entrepreneur invariably starts using the business as a piggy bank and draws the remainder of his requirements as drawings therefore hiding the actual (normally) bad state of the company.
Shocked? You bet I am!
I’m the first to admit that I need to better understand the balance sheet and know what to look for between the numbers. Having partially gone through an accounting course a few years ago at one of the leading banking training institutions in Bahrain, I still need the numbers to be demystified so that I instantly know the health of the business. I’ve started to take good steps in that regard by hiring a professional accountant on a part time basis to create the reports I need, put in the budget and cash flow sheets based on which I can now make intelligent decisions not just to continue to have a healthy company, but chart a proper and pragmatic growth path.
Having a “proper” pay is – I realise now – a very important factor. So I started looking around for resources to help me equate my position to those like-sized companies to know what a good and comparable salary should be. Needless to say, statistics are not our countries’ strong points, where these issues are deeply buried and one of the taboos it looks like, but I came across a timely article that can give me some guidance:
CEOs in the UAE on average earn Dh1.386 million ($377,664) per annum or Dh115,500 ($31,470) a month – less than their Saudi and Qatari peers with Arabic CEOs commanding 10 per cent premium.
CEO’s from Saudi Arabia top the money list with an average annual salary of Dh1.55 million ($422,280) a year or Dh129,150 ($35,190) a month.
The Gulf Business survey ranked the GCC CEO’s as follows; Saudi Arabia, Qatar, UAE, Kuwait, Oman and Bahrain and is based on CEOs who are responsible for sales of more than $50 million. [source]
While my company is a long way away from turning over $50 million, at least I know now where to look for the information I require, and that is recruitment agencies by looking for someone to replace me and see how much I need to pay that person!
I’ll let you know how I get along.
Do you have any insight on how much I should be getting paid? Can you offer some resources to help me understand this issue better?