What to Pay Your Team?

One of the toughest decisions you will make as a small business owner is how much to pay your team members. Even if you purchased the business with a team intact, you will need to review the payroll and benefits and potentially make life changing decisions.

The best place to start is by reviewing your total payroll budget - how much can you afford and how many people do you need? Establish this as a percentage of sales or gross margins - at a level where you want the business to be in 9-12 months. This will allow you to hire ahead for growth.

Collect industry data and association data for your specific business. It's worth paying for the data if it is available. Here is one place to look - and there are many more that you can Google by typing "industry pay rates". If you are using a payroll service of any kind (and you should be) - ask their help in supplying competitive data. Identify your staffing positions taking into account the degree of experience required, degrees, seniority, etc. Establish a range of pay for each position. Do this even for existing team members. Remember that compensation includes regular pay, bonuses, health care, retirement 401(k) contributions, and even eventual ownership sharing. Calculate the Total Compensation - and the split between regular pay and other benefits.

When you have established the positions and the payroll ranges, i.e.  Manager, $35-40K, 10% bonus target, $1000 401(k) matching, and up to $200 / month for health insurance - you can now take the next steps.