When facing a venture, many SME owners fall into the “temptation” of not setting their own remuneration. However, this can have negative consequences. Not assigning financial compensation to the entrepreneur means not quantifying the opportunity cost of his or her time. Linked to this, it is also important to take into account the entrepreneur's skills as an SME leader. This implies, among other things, the ability to delegate and focus on what really generates value: abandoning operational tasks to spend as much time as strategists.
Faced with this situation, many entrepreneurs are faced with the dilemma of determining a salary or withdrawing dividends. However, it is important to understand that both are independent concepts. On the one hand, the entrepreneur should have a salary based on the work he does, which must be constant and known. On the other hand, the results of the SME, which are usually variable, then generate a proportion to reinvest and another as dividends. Combining everything together could produce too much reinvestment without results for the entrepreneur, or on the contrary, an “emptying” of the company.
It is essential to give an economic value to the employer's work through salary. Firstly, because it is what determines the value of their work and at the same time because not having their own salary “biases” the company's results, by including this remuneration within the company's results.
