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 called into Dave Ramsey‘s “EntreLeadership” podcast with a surprising dilemma: one of his employees asked for ownership in the company. The caller, a 22-year-old CEO of an outdoor recreation event company, wasn't sure how to handle it. Ramsey’s response was part tough love, part strategic advice, and all classic Ramsey.
Too Soon For Partners
“You’ve got to be kidding me,” Ramsey said with a laugh. “I have two employees and I just started this and I’m 22 years old. We’re not dealing out equity at this point. No way.”
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The caller explained he started the business when he was 18 with a few hundred dollars and had grown it to about $500,000 in annual revenue. He hired the employee full-time to help run events while he focused on scaling.
“I pay them a salary,” the caller said. “And recently they were doing a good job so I gave them 10% profits on merchandise and 5% profits in the business at the end of the year. Even after doing that, they still insisted they want ownership.”
Ramsey didn't hesitate. “Hit the road, Jack. Not a chance. The last thing you need is a partner,” he said. “The tail’s not wagging the dog here. You’re the dog, man.”
Pay Like A Partner, Don't Give Up Control
Ramsey shared how he compensates his own team at Ramsey Solutions: “I’ve got vice presidents in this place, I’ve got executive VPs, my operating board—none of them have a salary. They all get paid off of the bottom line of the company the 15th of the month following. They get paid a percentage of what the company created in profits the month before, and they make really, really good money.”
Ramsey made it clear that while the employee may be valuable, asking for equity in a small, young business is “asinine.”
“What they’re really after is more money,” he said. That’s why Ramsey recommended that he pay them as if they were a partner, but without giving them actual ownership.
Ramsey then outlined a compensation plan: pay a lower base salary and add a percentage of the profits from the events the employee manages. For example, if two events per month bring in $10,000 each in profit, and the employee is responsible for those, paying 15% of that profit would result in strong earnings.
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