What is a Business Owner Worth? - Nicaragua Internship Summer 2009

How much do you make in a year? It’s a question that is more acceptable in Central America than in the United States, but its response is often quite different. Whereas a North American often knows her salary at least in general terms, in Central America that often is not necessarily true.

In a recent meeting of over twenty-five bakery owners and workers, the question was posed, “How many of you pay yourself a salary?” Not a single hand was raise, and it took further questions to learn that at least one woman set aside money each period for her own expenses, to pay her workers, and to save up for future investments in the bakery.

However, this raises the question of what an owner of a business is worth. How much should a bakery owner pay himself? How much of the profits should go to the owner, how much should be reinvested in the company, and how much should be directed toward other things? While these decisions may be some of the first made by someone starting a business in the US, many of the bakeries represented in the meeting had been in existence over ten or twenty years. During that time, funds are allocated as need arises instead of through careful planning. Some owners may choose to reinvest almost everything in the business while others are generous with their personal spending. In either case, the line between personal and business expenses is blurred.

To help business owners take control of their finances, Business Professionals Network (BPN) teaches them to track their finances. While the focus is on the business costs, expenses, and income, owners are also encouraged to do the same with their personal finances. By making a personal budget, a businessperson can determine what salary is necessary to cover his expenses, and what should be left for the company.

In the end, what is an owner worth? She is worth a salary that covers her expenses but that still leaves profits to reinvest in the company and protect it from shortages. An owner who manages the company well should not be keeping every dime of profit, but should also have a salary that allows freedom to enjoy life.

All in the Family - Nicaragua Internship Summer 2009

"What do you want to be when you grow up?" It is a question that most North American children learn to keep a ready answer for. And thanks to adequate school systems, scholarships, and many support systems, children who work hard often have a good chance to achieve their goal to be a doctor, pilot, or even an astronaut.

In Nicaragua, opportunities are fewer and while children still dream great dreams, their future career might depend heavily on the work their father and/or mother does. For this reason, businesses in Nicaragua often are a family affair. Children from a young age may begin helping in the family business to learn a trade and expand the capacity of the company. With a successful business parents will be able to better support their children and even send them to college. Also, an expanding business may provide employment to cousins, nieces, and nephews so that they may also add to their family income.

After working many years as a cashier, Susan* lost her job and needed a new source of income. She first tried selling cosmetics and then switched to natural drinks. She grew this business into a small carry-out restaurant run from her house. As business expanded, she needed more help, and now she is able to employ her two sisters.

In another family, the father has a mechanic shop. His sons are reaching the age when they can begin working, so he is training them in mechanics. However, it is his wife who keeps the financial records for the business. In this way, the business depends not only on the father's work but on the contributions of many family members.

In Nicaragua, a successful business has the potential to support not only a business person, but an extended family, meaning opportunities for children to get a higher education and for families to improve their standard of living.

*Name changed