How the number is worked out
Pay yourself what is left of monthly profit after the business has topped up its cash reserve. The reserve target is monthly expenses times your buffer months, and the shortfall against it is spread over six months. The common mistake is starting from what you need and hoping the business can carry it, which turns every slow month into a personal pay cut.
reserve target = monthly expenses x buffer months reserve set-aside = shortfall vs target / 6 months pay yourself = monthly profit − reserve set-aside survival buffer = cash / (expenses + your pay)
The order is the whole method. Most owner-pay advice starts from what you need and hopes the business can carry it; this starts from what the business needs and pays you from what remains. The JPMorgan Chase Institute's 2016 Cash is King study found the median small business held only 27 days of cash buffer, which is why the reserve goes first: a business with no buffer turns every slow month into a personal pay cut. How large the reserve itself should be, sized to how your revenue arrives, is the cash reserve calculator's job.
The last line is the honest cost of the decision. Your pay is an expense like any other, and the survival buffer is the same arithmetic as a startup's runway: cash divided by what a month costs. The mechanics of actually moving the money, draws, payroll, distributions, entity by entity, are in how to pay yourself as a business owner, which also covers why a funded founder should not take zero.