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Ask Dave

Paying A Good Enough Cut

Dave explains to Chris that he wants a team member, not an employee, that generates more money than he costs.

QUESTION: Chris asks how you determine the percentage of money you should pay your first employee.

ANSWER: I want team members, not employees. An employee comes in late, leaves early and steals while they are there. The percentage I want is that I want them to make me more than they cost me. You can hire a salesperson and give them a cut of what they sell, or an administrative person that frees up a revenue producer. Keep salaries as low and you can and pay lots of profit-sharing and bonuses. That way, you are not as obligated to overhead if times are tough.