Fueling Small Business Growth with Aligned Compensation

The natural dilemma of every small business is investing in growth ahead of realizing profitable and positive cash flow results.  It’s a constant push/pull realizing you need more resources – product, plant capacity, people, etc. – to deliver growth you have confidence will materialize, but don’t have the capital to invest.

Maybe there is a creative solution on the people side of the ledger.  These are tough times and the market is ripe with great people looking for work and a chance to prove out their worth.  Small businesses need great people resources and “can’t afford” the investment.

Consider an incentive laden “hiring” approach that is directly tied to “money coming in” for the firm:

  • Offer low to no wages.  Definition of relationship as contractor or employee with benefits depends on the ability and willingness to pay wages
  • Provide benefits as incentive to “hire” commensurate with lower wage scale
  • New business has associated Gross Margin attributes after Cost of Goods Sold (COGS).  Include in COGS a fee for marketing, sales, development talent for these people who can directly drive these new customers or new revenue growth.
  • The approach requires analysis to ensure that this new growth adds incremental margin that does not disrupt any current SG&A requirements or cash flow
  • Overpay market for the risk taken on by these individuals and you may find them hungry to deliver for future employment rewards and direct alignment of compensation with success for your business

This solution certainly is not for everyone, on the employer or individual side.  However, there are times when it’s an alignment of needs where this approach can be mutually beneficial.

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