“How much should I ask for as a bonus for increased sales? How about asking for an ownership interest in the company?”
Published on July 25th, 2009 by Alan L Sklover
Question: I work in construction, and was recently laid off. I was just offered a new job in Knoxville, TN, which is three hours away. The job offer is for the same amount of money I was making on my last job. I would have to move my three children and wife if I took the job.
The best part of the job is that the owner wants me to be his “right hand” and to help him triple the sales in two years. I think its feasible, but would be a lot of work.
How much should I ask for on the profit of each project as my bonus? Also, should I ask for an ownership interest in the company?
Greenville, South Carolina
Answer: These are really great questions. However, for the reasons below, I’m afraid I really can’t answer them.
First, your questions focus on the “rewards” of the new job, namely, bonus and ownership. How much of each to ask for, and how to structure those payments, is something that I could not possibly comment on, as I don’t know the nuts, bolts, facts, details and dynamics of the business. For example, if each project can be expected to bring in $100 of profit – or $1 million of profit – would surely make a difference in how much you should ask for. Likewise, if the company is presently valued at $100,000 – or $75 million – makes a big difference in how much of the ownership you should ask for.
It is great that you are thinking like a businessman – about sharing profits and becoming an owner – but you really do need to consult with a local attorney or accountant about the specifics of this new employer, and the specifics of your job, and the best ways to approach becoming a real part – and partner – of the business.
The new offer seems great. However, moving your family is a very serious – and possibly expensive – thing to do. Your questions to me focus on the “rewards of the job,” that is, bonus and ownership.
Second, while my clients focus on “rewards,” as you are doing, I often focus more on the “risks.” The new offer seems like a great opportunity, don’t let the “stars in your eyes” blind you to the potentially harsh realities of what could happen. What will happen if the second week on the job – one week after you purchased a new home, and one day after your kids started their new school – the new boss changed his mind, and decided he wants his son-in-law to be his “right hand?” That might place you in a very difficult set of circumstances, and really upset your wife and kids.
I would encourage you to first consider the “risks” before the “rewards,” and think about the following questions, each of which suggests the need for what we call “risk-limiters:”
(a) Will the new employer cover (or share) your costs of relocating to Knoxville?
(b) If things don’t work out, will the new employer cover (or share) your costs of moving back to Greenville?
(c) Will the new employer agree to “commit” to employ you for at least 6 months, or one-year?
(d) If things don’t work out, will the new boss agree to give you a minimum amount of notice before terminating your job, and/or severance, and/or continued health care coverage?
(e) Will the new employer agree to put any of his promises to you into writing?
So, as to “rewards,” and how much to ask for, and how to structure the rewards, you really need to discuss the details of the business with a professional, who can give you good advice. As to the “risks” of the new job, consider them, too, before you take the big step of relocating.
Great luck to you and your family in this new opportunity! Just make sure you “look” before you “leap.”
Best, Al Sklover
Asking for an Equity Ownership Interest in your employer’s company is a very delicate request. And, too, it is a bit complicated. Consider a Consultation with Al Sklover before you make your request, to ensure it is done right. Just [click here.]
© 2009 Alan L. Sklover, All Rights Reserved.