Say No To Creating Business Partners

Daniel owns a local moving company and is thinking of making his general manager a partner in the business. Dave thinks this is a bad idea for a few reasons.

QUESTION: Daniel owns a local moving company. He has an employee who wants to invest into the company. Daniel could use the money, and he’ll probably take money from elsewhere if he refuses the investment. How should he structure the funding?

ANSWER: I wouldn’t do it. You’re about to get yourself in a mess. You have a find company that’s making money and growing. Let it grow and go slowly. If you do this, your employee will have a whole different set of opinions if he thinks he owns part of the company because he does or because he has loaned you money and his return on that can be percentage of profits or whatever. And obviously, he's a valuable guy. Everything will go along well until something falls apart in his family, and all of a sudden, he goes crazy on you. And you can get into all kinds of messes. Then, you're stuck--attached at the hip with this guy.

It's time to build a layer of leadership--your first layer of leadership. The way you do that is delegate. He should be able to finish your sentences and he can execute what you would do without being on the premises 24/7. I would also cut him in on some of the profits as a way to incentivize him.

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