Dave Says on Business Commission Only is Rare

Dave Ramsey
Posted: Aug 01, 2012 12:01 AM

Dear Dave,

I own a small business, and I pay my people on straight commission. We’ve started growing a bit, and I’m having trouble finding good, new reps who want to work under this kind of compensation structure. Does your team work on commission, and if so, how do you do it?


Dear Gary,

I love commission plans that rely heavily on incentives. I just plain love the idea of commissions. I mean, I’d put my receptionist on straight commission if I could figure out how to make it work.

But honestly, there’s hardly anyone on my team that works straight commission. The majority of my folks work on a small salary plus commission, or some kind of draw, until they get rolling.

Now, I don’t want them fat and sassy and getting something for nothing. That’s not fair to me. But a broke salesperson smells, looks and acts desperate. They tend to promise the sky and deliver something a whole lot closer to earth.

The key is to find a happy medium. So I usually give my guys enough to get by, but if they want anything better they have to go kill something and drag it home. The base keeps the kids fed and the lights on, but if they want a little fun and some pleasure in life they have to work for it!


Dear Dave,

I’ve been a real estate agent for three years. I was wondering if you think the idea of a business that digs up information about potential deals for real estate investors is a good one.


Dear Charles,

This is an interesting idea. The first thing I would do is see if there’s an investor group in your area. These are the folks who would stand to benefit from something like this.

Chances are if you were to gather good information on tax delinquencies, bankruptcies, foreclosures – anything with the potential to pick up a real estate bargain – packaged all the information and did the crunch work, you could publish a valuable newsletter to which investors could subscribe.

These days, with everyone gravitating toward technology, it might be even more economical and appealing if you made the service available via e-mail or on the Internet. This way you’d have no mailing costs, no paper costs and really streamline the marketing process.

Good luck, Charles!


Dear Dave,

One of my customers in the restaurant business owes me $9,000 for equipment purchases. I just got a notice in the mail that they’re in the process of filing Chapter 11 bankruptcy.  There’s no lien on the equipment I sold them, but they gave me three posted-dated checks that bounced. Can’t you go to jail for that kind of thing?


Dear Kurt,

There is a criminal side to this situation, but don’t threaten or even contact them. They’re now under the protection of federal law, and there’s an injunction preventing you from trying to collect this debt by any means other than the court system.

In a bankruptcy, the court and attorneys get paid first. After that comes payroll for the employees and then preferred creditors. If you can work your way to the front of this line because of all the bounced checks, you’ve got a better chance of getting your money.

If they do make it out of Chapter 11, they will submit a plan to the court laying out how they will pay creditors. This plan can propose that unsecured creditors get pennies on the dollar. If the plan is approved by the court, you could get little or nothing and they can emerge from bankruptcy and still be in business.


* Dave Ramsey is America’s trusted voice on money and business. He’s authored four New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover and EntreLeadership. The Dave Ramsey Show is heard by more than 5 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.