Why the average lies to you
If your last six months of profit were $2,000, $2,200, $1,900, $2,100, $9,000, and $2,300, your average is about $3,250. Pay yourself off that number and five months out of six you are draining cash. One great month drags the average up; your bills arrive every month regardless.
Take your last 6 to 8 months of profit after every cost. Use the median, the middle value, as your ceiling. Then look at your worst honest month, the lowest real month with no excuses attached. A draw is safe when the worst month could still cover it, or when your cash cushion absorbs the gap without touching your runway floor.
Worked examples from four real business shapes
These are the demo businesses inside Counsel, and the same numbers the app shows:
| Demo business | Median monthly profit | Worst honest month |
|---|---|---|
| Ember & Oak (a full-service restaurant) | $4,100/mo | $1,900 |
| GreenLine Yards (a landscaping crew) | $5,200/mo | $2,400 |
| Kiln & Co. (a ceramics studio selling online) | $3,050/mo | $2,050 |
| The Wren Sessions (a working musician) | $1,450/mo | $300 |
Notice the spread: the musician's median is $1,450 but the worst month is $300. That gap is the whole story. A draw set at the median without seeing the floor is a draw that breaks in February.
Do it by hand
- Export your last 6 to 8 months of deposits and expenses (your POS or bank has this).
- Profit per month = deposits minus every expense, including the ones you forget: software, fees, quarterly bills divided by three.
- Sort the months. Middle value = median. Lowest = worst honest month.
- Set the draw at or below the median. Know exactly how a worst month gets covered before it happens.
Or use the pay yourself calculator and let it sort for you.
Common questions
What if my income is completely irregular?
Irregular income is exactly why the median beats the average. The median ignores your outlier months in both directions. If even the median feels unstable, widen the window to 12 months and let the worst honest month set the draw.
Is the owner draw the same as a salary?
No. This is the cash-math layer: what the business can hand you without starving itself. How you structure that payment for taxes is a separate question for your accountant.
How often should I recompute it?
Monthly is plenty. The number should be boring; if it swings a lot month to month, that swing is the finding.