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If you don’t plan on exiting, equity isn’t the right move. At some point said salesperson will fully vest, you guys will be generating cash (profit) and in the
by elamje 5y ago
If you don’t plan on exiting, equity isn’t the right move.
At some point said salesperson will fully vest, you guys will be generating cash (profit) and in theory that salesperson will feel like they might have a right to start taking dividends. This is a slippery slope - you as a management team will make decisions benefitting the business, e.g. retaining all earnings to reinvest while your employee is going to want the cash dividends.
Sales is the perfect role for commission. Salesperson can make a ton of money if they crush it, and you won’t have to pay them a lot if they don’t perform well. Business & personal interests are aligned.
Equity is interesting if it’s significant enough as a percent of company valuation and there’s a real chance of a large payout. Otherwise, it’s noise and likely will lead to unmet expectations.