A 22-Year-Old CEO Asks Dave Ramsey What To Do About An Employee Asking For Ownership. His Advice After A Sincere Laugh? ‘Hit The Road, Jack’

A young business owner recently sought advice from financial guru Dave Ramsey on his “EntreLeadership” podcast. The 22-year-old CEO of an outdoor recreation event company faced a surprising dilemma when one of his employees asked for ownership in the company. Ramsey’s response was a mix of tough love and strategic advice, reflecting his classic no-nonsense approach to business.

Ramsey was quick to dismiss the idea of granting equity to the employee, given the company’s small size and the caller’s young age. He emphasized the importance of maintaining control and ownership as the business grows. Instead, Ramsey suggested a compensation plan that rewarded the employee based on performance without granting actual ownership.

The caller shared that he had started the business at 18 with minimal capital and had grown it to $500,000 in annual revenue. He had already offered the employee a salary and a share of profits from merchandise and business earnings. Despite these incentives, the employee still pushed for ownership.

Ramsey recommended a different approach, advising the caller to pay the employee based on the profits generated from events managed by the employee. By offering a lower base salary and a percentage of event profits, the employee could still benefit financially without becoming a partner in the business.

One key takeaway from Ramsey’s advice was the importance of maintaining detailed accounting records. He stressed the need for monthly financial reporting and job-costing methods to track profits accurately. By having clean and transparent financial records, the caller could accurately compensate the employee based on performance.

Ramsey concluded the conversation with words of encouragement for the young CEO, highlighting the potential for growth and success in his business. He emphasized the importance of setting up a compensation structure that incentivized the employee to perform well while preserving the caller’s ownership and control.

Incorporating Ramsey’s advice into a WordPress platform, the new post would provide valuable insights for young entrepreneurs facing similar challenges in managing their businesses. By focusing on performance-based compensation and maintaining ownership control, business owners can navigate employee requests for ownership while fostering a culture of accountability and success.