Before you give up 50% of your business..
Have you ever watched Suits?? I have. The whole series…twice lol. I was hooked when Episode 1 emphasized the importance of getting a client to sign an engagement letter. I knew I was in the right place haha.
Anyway, let's say you have a superstar on your team - when it comes to technical knowledge, presentations, and client meetings, they are a 10/10.
We're talking real "Mike Ross"-type capabilities.
But similar to Mr. Ross, there’s some real gaps in their skill set:
They’re not great at managing their time - they sometimes miss deadlines and sometimes overpromise in their client meetings.
They don’t reply to emails as quickly as you'd like.
They aren’t bringing in much (any??) work.
In short, they have some growing to do which is completely fine and normal for any employee. But when they advocate to become an owner, what are your options?
You might think giving up half of everything you’ve worked for (with a big buy-in) is your only option.
But it’s not.
Let’s talk about three different paths you can explore to retain a key employee who’s not quite ready to make that jump to full partner.
1 - Commission Employee
This can look like keeping their salary the same / similar plus offering a %% commission on any new work they bring in the door.
What businesses often overlook:
If you structure this wrong (i.e. based on the wrong metrics), you’ll train the employee to cherry-pick only the “easy” clients and neglect internal work or team leadership.
Commission-only on “new” work with a set recovery rate works better than paying on all revenue from new work. I.e. Only work that you can bill at least 80% of the recorded time is eligible for commission.
Commission plans rarely replace true partnership desires in the long term - this is definitely a short-term retention tool, not a forever plan.
Many employees overestimate how easy it will be to bring in work - and get discouraged when they realize it’s much harder than it looks. Just fyi if you’re hoping for an engaged employee…
Commission works best when:
The employee is great at service delivery but not-so-great when it comes to business development; you / the business wants more business development but you aren’t ready to share ownership.
2 - Cost Sharing Arrangement
This is a situation where some expenses are shared, but most are separate. Similarly, billing, bookkeeping and other core business functions are handled separately. This is more of a ‘friendly landlord’ model, not a true partnership.
What businesses often overlook:
The employee often wants the perks of being “part of your firm” (brand, reputation, referrals)… without actually carrying the costs of being an owner. So: you’ll need crystal-clear boundaries in writing about what’s shared, what’s not.
You’ll lose some brand control - if the key employee provides poor service under a joint umbrella firm name, clients won’t care about “cost sharing” nuances.
Many employees say they want autonomy but still expect marketing from you. Is that what will happen now? Maybe? Again, get clear and put it in writing.
Cost sharing works best when:
The employee is entrepreneurial but not ready (or not a fit) for formal partnership; you / the biz are okay with building a looser affiliation model.
3 - Small Partnership Stake (with path to grow)
This situation allows you to give up a smaller piece of the pie now (think 5-10%) with the promise of more profit sharing in the future if certain KPIs are met.
What businesses often overlook:
5% or 10% can feel meaningless to the key employee if you don’t structure distributions clearly. For example, does 5% mean “5% of net profit, gross profit, or revenue”? Paid when?
Tied into this, employees often misunderstand the difference between “salary”, “profit”, and “distributions” - leading to big expectations that don’t match reality.
Giving up 5-10% without clear performance metrics can create resentment on both sides. The employee feels they “own part” but gets no say (and that’s probably legally correct based on the pship agreement..); the owner feels stuck with a disengaged minor partner.
Small partnership %% work best when:
The employee has leadership potential but needs to prove their understanding of how a business really works; you / the biz wants to build loyalty while protecting core equity.
And let me be candid, friend: none of these solutions will be considered “ideal” by the person on the other side of the negotiating table.
Not when they’re expecting terms like 50% partnership interest and a buy-in that’s deducted from pay for over 48 months so they’re not out of pocket anything.
But, as one of my past mentors said, “If you want to get paid like a partner, you have to work like a partner”.
So, to increase your chances of success for retaining a key employee with potential, I need you to do two things:
Step One:
Decide which option above works best for you (and your nervous system) before having a convo about what the future looks like with your key employee.
Because, yes, these conversations are hard, but you know what’s harder??
Resenting a new 50% partner for working 15hrs / week and bringing in $2k of work per month while you’re working 45hrs / week and bringing in $40k of work each month. Remember: you still have to give them half of your profits.
The reality is each option of the three options comes with trade-offs and the potential to create problems down the road if not structured intentionally.
And you and I both know of wayyyy too many situations where partnerships haven’t worked out and one person has to buy the other out.
It’s messy, painful and emotionally exhausting.
So friend - when making this very, very important decision: the best choice isn’t what your competitors are doing or what the latest biz book says will work.
No.
It’s what works for you, your biz, your leadership style and your key employee’s actual strengths and weaknesses.
Step Two:
Start this convo / process early - i.e. at least six months ahead of the anticipated ‘start date’.
That means, if your business runs on a calendar (i.e. Dec) year end, start these conversations by July at the absolute latest.
This can look like an offsite coffee to introduce the proposal / idea and tease out the employee’s level of interest
Then putting together an informal LOI where you agree on draft terms (Sep/Oct)
Getting a lawyer involved to draft a legal document evidencing the arrangement - could be an employment agreement + commission detail, cost sharing agreement or partnership agreement (Nov)
Onboarding planning (Dec)
And finally - go-time (Jan)
So friend — if you’re in this spot with a key employee:
Do not leave this to chance.
This is one of the highest risk decisions you’ll ever make in your biz and it has a massive impact on the long-term health (and profitability) of your business.
A bad partnership deal is one of the biggest reasons I see founders drained, frustrated, or worse - winding down businesses that were once thriving.
In my management consulting practice, we help business owners figure out exactly what to do when a key employee wants a seat at the ownership table… but isn’t quite ready yet.
A day in our life looks like facilitating emotionally-charged partnership conversations, mapping out hiring / restructuring strategies (if needed), drafting and comparing the financial outcomes of various partnership, cost-sharing or commission models, and ultimately helping clients make leadership decisions that protect their profits (and their sanity).
Through our work, we’ve helped businesses avoid the pain that comes with promoting too soon and set up sustainable growth paths that actually work - for you, your nervous system, and the long-term health of the business.
So, if you’re staring down a situation where an employee is asking for more (and you’re not sure what to offer or how to structure it) - my team and I would love to help you map out a plan that retains top talent without giving up 50% of what you’ve built.
You can book a quick, no-pressure call here:
And remember - even Harvey didn’t make Mike a name partner overnight.
Here's to fewer partnership plot twists,
Tanya