June 27, 2016
Today’s question came from Roger in Amelia, VA.
The first issue I address on today’s show is whether people have other reasons to stay with your firm than obtaining equity and how these drivers can be mobilized to negate the need for employees to own shares in the business.
If the main reason for people to stay is maximizing their income, several equity-alternatives are available, including performance-based compensation and regular salary increases.
If your employees “need” equity, we explore what their needs are and how owning equity would satisfy such needs, or how granting shares could help the business owner.
I identify seven such reasons on the show, including alignment between owner and employee, prestige, influence, tax treatment, etc. and suggest alternative solutions to granting equity. Even if equity is the ultimate solution, there are options that allow business owners maintain flexibility and protect themselves should the partnership ever sour.
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Your Succession is Success!