Big accountancy firms show that sharing equity to your senior and high-performing team members plays a big role in business success. But what’s the ideal share scheme?
Watch the video to find out!
Is It Worth Giving Equity for Salary and Loyalty?
When it comes to your business, you have to attract high-performing consultants. These are the people who will nurture your business to the best of their abilities. They are your team members and employees who will drive sales growth to the organization. If you’re lucky enough, they might even become friends who will stick by your side at all times. But how do you earn those types of people in your life? And more importantly, is it worth giving equity for salary and loyalty?
These questions are normal for you to ask. After all, it’s your business. Any hard-earned money that comes your way can be difficult to let go. But when you share a portion of your business profits to your team, it’s a viable strategy that keeps them motivated. It will keep their eyes on the game plan and will eventually lead to long-term success in the future.
This plan is useful for companies or businesses that don’t have enough cash flow for additional benefits. A lot of new employees would go for places that have amazing perks. So when you ask yourself ‘is it worth giving equity for salary and loyalty?’ the answer is a resounding YES!
What is Equity Sharing?
Before we dive into the details of building loyalty in employees, let’s start with the basics. What is equity sharing? It’s a method or ‘scheme’ that is basically shared ownership.
When you’re the owner of the business, you allow a percentage of your shares to be given to high-ranking employees. You and the other person must agree on the percentage. This gives the other person a form of responsibility to the company. They are called shareholders. In exchange for raising business capital, they are entitled to partake in the profits and growth of the company. Before you appoint a shareholder, you must also ensure they understand their rights and responsibilities as well.
As a business owner, it can be difficult to allow your shares to be given to other people. But it’s a good strategy if you want your company to grow. You have to do everything in your power to make the business successful. If you’re short on cash flow, equity sharing is one way to get the ball rolling.
How Can You Build Loyalty in an Employee?
Building loyalty isn’t as easy as you might think. Everybody has their own agenda, their own bills to pay, and their own values to consider. If these factors don’t align with yours, then loyalty might be out of the equation. After all, they’ll only think of your business as a workplace.
You have to find people who will feel as strongly as you in terms of your business. It’s going to be hard to find them but they can also be made. For example, by telling them of your business plans and sparking interest, you can gain their favor. How do you increase the odds of their favor towards you?
You make them part of your business. You give them power. You appoint them as shareholders. This gives them a sense of ownership, a responsibility to upload and a portion of the promised shares. It’s a win-win situation. When your business succeeds, so will they. So if you ask, is it worth giving equity for salary and loyalty, there’s your answer!
Another question you should ask is: how much of the company profit should you give to your employees?
Is it time to hire a business strategy consultant?
What’s a business strategy consultant and how much do you need them? When do you need them? If you’re starting a business, you might not want to spend on people you don’t need. But rest assured, a business strategy consultant is someone you definitely need as part of your team. They work hard so that you don’t have to!
An IT consultancy business needs people who are fully aware and understand the business roadmap. This means people who can identify business pain points and create perfectly executable solutions to address them. If you’re looking for the best business gurus out there, look no further than Loading Growth!
There is no perfect time to hire a business strategy consultant. They are always relevant since they give out practical tips you can apply to keep things rolling. They also have a three-step program that ensures accelerated growth for your business. You can rely on good resources, tools and accelerators that will help you move in the right direction.
Interested? Reach out via email info@loadinggrowth.com or book a 45-minute strategy session now!
What Is the Main Purpose of the Scheme?
The main purpose of sharing equity with your employees is purely beneficial. You boost production, retain high-performing employees and attract high-quality talents. If you’re lucky enough, you can even get a combination of everything!
It’s up to you to decide what your main purpose of sharing equity is. If you’re low on business capital, using equity share as salary is also a good start. But if you want to build loyalty by making employees more than employees, then you’re on the right track.
There are different equity sharing plans you can adopt that will be the most effective for the team. Since you’re the owner, you know what’s best for you and your employees. Then it will be a matter of deciding how much of the equity will be given.
What Kind of Reward Will Appeal to Them?
Everybody has different goals and plans when it comes to their lives. As the leader, you need to recognize what your team members or employees need. If many of your people are youngsters, they might want cash awards or stock options. But if you have many older employees, they might want something else. Something that will add to their nest egg.
Remember, equity sharing is vastly different from profit sharing. So when you choose people to share your equity with, you’re appointing them to higher positions. This can be applied to founders, the people within the upper management and even executive level employees.
When you choose the right equity sharing plan, consider your employees. Understand what kind of reward appeals to them. Then decide on how much their percentage should be. Depending on the industry, the percentage is going to be vastly different. But for IT consultancy firms, 25% is a good number to start.
Conclusion
Being a business owner means making critical decisions to boost production and sales for your business. This is why you might ask yourself if giving equity for salary and loyalty is worth it. It would mean adding more people into the same level of decision-making that you have. It might be risky but it’s also worth it in the end.
Why? Because you build loyalty and earn trust. You give responsibility to people who want the best of your company as well. You give equity-based awards and issue equity shares. Not everything will be up to you now. Of course, as the CEO, you still have power but that power is shared now to other people.
Make the right decision in choosing people who will be part of your business.
