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Setting start-up salaries
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May 22, 2000: 9:30 a.m. ET
How to compensate yourself adequately without scaring off investors
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NEW YORK (CNNfn) - Dear Jane: I'm 25 years old and run an 18-month-old Internet company. We are out to raise $2 million. All four partners have worked for no salary so far. We want to know how much to put down for our compensation. We feel we should earn respectable salaries of $70,000 each for working these 80 to 100 hours weeks, but we don't want to scare away investors.
You have definitely put in your sweat equity and if you do raise the outside money, your investors expect to pay the management team. You need to find out what other, similar companies are paying their managers and base your requests on that.
You can't expect to be paid for all the "back wages" you didn't collect in the past year and a half. You won't see that money, but if things go well, your company will increase in value and you will have a solid financial future.
When you are figuring out all these money issues, be sure to include fair salaries and benefits for the employees. You probably also will have to offer them some sort of stock options and a basic pension plan. In these super-competitive times, you have to do everything you can to keep your employees happy and feeling loyal.
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