Dave,

I’m a personal trainer. I bought into a franchise last year, and I’ve done a pretty good job of building it up since then. I’m starting to think expansion might be possible, but I wanted your thoughts on the best way to do this without becoming involved in any kind of partnership.

Steve

Steve,

I’m relieved to hear you’re already shying away from the idea of a partnership. I don’t believe in them. But I love the idea of enterprising, hard-working people participating in a winning situation.

Some of the folks on my team are paid on a percentage of the net profits in their areas. Under this structure, it’s important for them to keep expenses down and revenues up. This concept involves generating new ideas, lots of energy and developing a real sense of ownership among team members. They’re not stockholders, technically, but I treat them as if they were, and let them have a vote in the process.

If you can hire a manager at $50,000 a year just on straight salary, then take that and divide it into your profits, you can put someone on a small draw, or a percentage of the profits. That way, they make $50,000 again if they earn the same as they did previously. If they double the amount, they’ll earn $100,000. Every time you make a profit you get some, and they get some. Run a profit and loss statement every month, close the books by the 15^th and write them a check. This way, you’re essentially putting them in business for themselves.

I hope you’ll think about it, Steve. What I’m talking about isn’t a partnership, but an employee with a compensation plan that’s based on profits. And that creates a completely different mentality. One where you both win!

- Dave