Why Most Agency Owners Underpay Themselves (And How to Fix It)

I want to talk about something almost every agency owner I work with does — and almost none of them realise is a problem.

They reinvest everything.

Every profitable month:

• New hire

• New tools

• New marketing

• New everything

  
  

On the surface, it looks responsible.

It looks like good business sense.

It looks like what you’re supposed to do.

But underneath it, there’s usually something else going on.

They don’t actually know how much they can afford to take out.

So they take nothing.

And they tell themselves it’s a strategy.

The Reality Most People Don’t See

I had a client last year:

• £420k revenue

• Profitable

• Strong team

• Good clients

  
  

Three years into the business…

They hadn’t paid themselves a proper salary since month three.

We ran the numbers:

• Retained profit ✔

• Cash position ✔

• Forecast ✔

  
  

They could have been paying themselves:

👉 £65,000 per year

And the business wouldn’t have blinked.

Three years of unnecessary sacrifice.

Not because the business couldn’t support them.

Because nobody had ever said:

• Here’s what you can take

• Here’s how to take it

• Here’s what happens if you do

  
  

The Business Should Serve Your Life

The business should serve your life. Not the other way around.

Why It Happens

1. Fear

What if:

• A client leaves?

• There’s a bad month?

• You need the cash?

  
  

Valid concerns.

But often used as a permanent excuse.

👉 The answer isn’t “never pay yourself”👉 It’s build a buffer — then pay yourself properly

2. Guilt

The team is working hard. The business needs investment.

Taking money out feels selfish.

But the reality:

You started the business.You took the risk.You built something from nothing.

Getting paid isn’t selfish. It’s literally the point...

3. Not Knowing What You Can Afford

This is the most common one.

And it’s completely fixable.

Most agency owners have never actually calculated:

👉 What the business can support

So they default to:

• Reinvest everything

• Take nothing

• Hope it works out
  

The Framework: How to Work Out What You Can Take

1. Know Your Retained Profit

Open your accounts.

Find retained profit — the accumulated profit not yet paid out.

👉 This is your dividend pool.

If it’s healthy, there’s usually room to pay yourself more.

2. Check Your Cash Buffer

Before taking anything:

👉 Do you have 3 months of operating costs in the business?

If not:

• Build that first

If yes:

• You’re in a position to pay yourself properly
  

3. Get the Salary + Dividend Split Right

For 2026/27:

• Salary: £12,570

• Everything above → dividends
  

Key thresholds:

• Basic rate dividend tax: 10.75%

• Higher rate kicks in at: £50,270 total income
  

👉 Plan around that threshold.

4. Set Aside Tax First

Before taking dividends:

• Check corporation tax position

• Confirm funds are set aside
  

👉 Taking money meant for HMRC = problems later

5. Pay Yourself Consistently

Stop taking random lump sums.

Instead:

👉 Pay yourself a monthly amount

Why it matters:

• Easier personal planning

• More stability

• Less financial stress
  

This Week’s Number: Retained Profit

Go into your accounts right now.

Find this number.

Real Example

3 years

That’s how long one of our clients underpaid themselves.

Not because they had to.

Because they didn’t know.

Your Checklist This Week

Go through this properly:

• Find your retained profit

• Check your cash buffer (3 months of costs)

• Check your total income (salary + dividends YTD)

• Check how close you are to £50,270

• Confirm your corporation tax position

• Speak to your accountant before taking dividends

• Set a reminder to review this every April
  

Three Things to Do This Week

1. Find Out What You Can Take

Open:

• Retained profit

• Cash position

• Tax position
  

👉 If those are in order — there’s likely money you can take now

2. Fix Your Salary

If you haven’t reviewed it:

👉 £12,570 is optimal for most directors (2026/27)

One adjustment = immediate tax efficiency.

3. Rethink “Reinvesting Everything”

Growth needs investment.

It doesn’t require you to work for free.

👉 If the business can’t pay you properly:

That’s a margin problem, not a sacrifice requirement.

Final Thought

The business exists to create a life you want to live.

If it’s not doing that — not because it can’t, but because you never asked it to —

That’s worth changing.

Want to Know Exactly What You Can Take?

If you want clarity on:

• Your retained profit

• Your tax position

• Your cash buffer How much should I pay myself as a business owner?
  

👉 Book a call and we’ll walk through it with you

Coming Next:

The Maths Edition - The break-even calculation every agency owner should know — and how to work yours out in under 15 minutes.