Share the Wealth - Share the Pain

As a small business owner - you are the boss - for better and for worse. But that doesn't mean you shouldn't be sharing the wealth - and the pain - with your key employees.

No matter how large or small the business, give your employees a stake in the business through variable pay and shared ownership. Variable pay means simply that when actionable goals are achieved, everyone's pay is increased as a result. This means having set the goals, monitoring the goals, ensuring that the employees can impact the progress towards achieving the goals, and when the goals are met - making the 'payoff' both quick and visible.

Shared ownership is a longer term incentive and one reserved for key employees. Right now, you own 100% of the business. If it can be sold for $1m - that's yours (less any loans outstanding). To create long term incentives, reduce turn-over, and attract key employees - consider setting aside a significant minority stake in the business to be shared with employees. There are obviously legal and accounting aspects beyond the scope of this tutorial - but in general, in return for all their hard work, you reward them with an actual ownership stake in the business.

You can read more about employee ownership plans by clicking on this link.

Have a happy and prosperous New Year.