Glossary
Owner's market salary adjustment
Putting a realistic wage for the owner's actual job back into the numbers. The most commonly missed cost in small business earnings.
In plain English
Many owner-operators pay themselves below market, or entirely through profit, so the business's reported earnings quietly include the value of the owner's unpaid labour. The market salary adjustment inserts a realistic cost for the job the owner actually does: general manager, head chef, lead technician, whatever it truly is.
For a buyer, this adjustment answers a critical question: is this a business, or is it a job with stock? If earnings collapse once a market wage goes in, the price should reflect that, and the finance almost certainly will.
Why a lender cares
Lenders always insert a wage for whoever will run the business, because someone has to, and the bank assumes they will want paying. Files that ignore this arrive at the credit team showing earnings that vanish on first adjustment. Ours arrive with the wage already in, at a defensible market figure.
Where this term takes you
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