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Do small business owners pay themselves from cash flow?

I'm clueless as to how small business owners pay themselves. I thought the owners pay themselves from the cash flow. Can someone help me determine how they pay them themselves? If a cash flow was $8 million how much would the owner pay themselves?

Sophia Watts

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The BAF Group LLC
MD

You have to look to the Seller or the Broker to really understand that, because there are different methods employed by different people. In some cases, when you get the Cash Flow numbers, all expenses are accounted for except whatever you pay for your financing costs, and whatever compensation you take from it. However, the SBA will require you to put your own compensation expectations into the Cash Flow computations, and many Brokers will do the same, with their presentation of information to Buyers. So again, you need to ask - there is no other way. For a more complete explanation of Cash Flow, we have a Blog and one of the posts specifically addresses this subject: http://combrokerbusiness.wordpress.com/2012/02/07/cash-flow-what-the-heck-is-it/

Jul 17, 2013

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