Profit share, equity, and options are terrible ideas

Profit share is a terrible idea! And so are equity and stock options.

Business owners ask me about this all the time, but I’m going to try and keep my soapbox short.

Three things I want to tell you about this.

1. Team members often don’t have enough control to affect profit, and so instead of leading to motivation, it leads to apathy.

“Oh, I can’t do anything about the profit. I have to leave it to other people.”

You don’t want them thinking like that.

2. Team members often can’t handle profit. Either they could get greedy, or they could get resentful about the amount of money they think that you’re earning.

3. The real underlying reason why business owners often reach for profit share is that they have fear of losing a good hire. When, really, you get better at hiring over time. You’ll find someone even better in the future.

Or perhaps it’s guilt about how much money that they’re earning. That’s a conversation for another time, though.

My advice is: don’t worry about profit share, equity, or stock options until you’re at $5m+/year in revenue and you’ve got a CEO or real senior-level talent that have autonomy to put in their own changes in the business.

Until then, there are plenty of ways to reward and incentivize the rest of your team.

DM me BONUSES on Instagram and I’ll send you my Team Reward Navigator custom GPT. It’ll help you decide on the right bonus for your team member and for your business.