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Ask Your Dad for the Business Instead of a Salary
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Key takeaways
- I've worked in my dad's business for 13 years essentially for free.
- Any advice would be much appreciated.
- You should appreciate that.
- So either if he can find somebody else who can do it for cheaper, maybe he's right, and if so, he should do that.
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Full transcript
Locally archived YouTube transcript with timecodes. Speakers are assigned heuristically and may be corrected editorially.
0:00I've worked in my dad's business for 13 years essentially for free. He taught me everything and I'm grateful for that. But I'm 33 now and for the last several years I've been running the entire company on my own because he was dealing with a serious illness. The company cleared around $300,000 in profit this year and that was a slow year. Meanwhile, he's sitting on about 2.5 million in retirement and a couple of expensive cars. His argument is that he's worried about having enough to get through his remaining years. I finally asked for 130k a fair wage for what I do and he said no. He said he could find someone cheaper. I've poured my heart and soul into this for nearly a decade.
0:33Any advice would be much appreciated. >> At any point in your career, you can choose whether you earn or you learn. You obviously learn and so that was a gift from your father. Zero disrespect there. You should appreciate that. So good. The second part is that one of you guys is wrong. So either if he can find somebody else who can do it for cheaper, maybe he's right, and if so, he should do that. On the other hand, if you think that you can get more than $130,000 with the skill set that you have, then you should be right and you should go do that. But at the end of the day, one of you is right and one of you is wrong.
1:01And so you just need to re let reality pick. But if you want to have something and the only person who can control that said no, go get it. I will give you one creative alternative though, which is that hey, instead of working for a salary, can I work off percentage of the business? Let's say we value the business at five times bottom line. Okay? So that would be 300k time 5 is 1.5 million. You could say, hey dad, you said you're worried about, you know, your health or having enough. Why don't I take this $1.5 million and I'll pay you over the next 25 years this $1.5 million. That way you always have cash flow going in and then I will take over the business.
1:33No one you never got a salary. He gets taken care of in terms of having an annuity from the business and that's that. So that's an option three. If getting a salary is something that he doesn't like and maybe would like to just work less, have cash flow and then ultimately transition the business over to you. And that's a taxefficient way to do …