1. Enter personal cash invested
Include founder funds contributed or loaned that you want to recover economically.
2. Enter annual founder salary
Use expected recurring cash compensation from the company.
3. Set a market salary baseline
Enter what comparable work would reasonably pay elsewhere.
4. Add annual distributions
Include expected recurring owner distributions or dividends.
5. Review the payback period
A “Not reached” result means the modeled annual recovery benefit is zero.
Where:
Assumptions: The model excludes equity appreciation, taxes, interest, and discounting. Annual salary and distributions are assumed constant.
Estimated founder cash payback period.
Use the result as a planning estimate based on the assumptions above.
Given: A founder invested $120,000, earns $95,000 from the startup, could earn $75,000 in the market, and receives $10,000 in annual distributions.
Calculation: Excess salary: $95,000 − $75,000 = $20,000. Annual recovery benefit: $20,000 + $10,000 = $30,000. Payback: $120,000 ÷ $30,000 = 4 years.
Result: At the modeled cash benefit, the founder recovers the invested amount in about four years.
That salary represents the founder’s opportunity cost. Only compensation above it is treated as incremental recovery in this model.
The excess-salary component is set to zero rather than negative. Distributions can still produce a payback estimate.
Include them only when you want to evaluate recovery of that personal cash and are not separately modeling scheduled loan repayments.
No. This estimator uses realized recurring cash benefits, not unrealized paper gains.
Use a multi-year cash-flow or discounted payback model when annual benefits vary materially.