Expert: Dr. Abdulaziz Jarkas - 4/11/2006

Question
A new company need me to manage and develop, we estimate by the end of year, we can create 1.5 million revenue, the net profit will be “25% - 35%”.  We do public construction, freeway and government, military jobs,  we project in 3-4 years to grow to 10 million revenue.  We are in networking, no worry about competition.

I search salary.com, but not clearly identify my salary range.
Here is my projection:  5% commission of gross revenue and $ 1,500 per month to start, plus 40 cent per mile(before company me car), plus ? % bonus, plus ? % to join ownership.

It is hard to project what is average monthly revenue, project size from $100,000 to over $ 2 – 3 million dollars.  The most conservative figure is $100k per moth, that means my commission will be $5,000 before tax(so if we can make 1.5 million this year,      I make $ 75,000 commission, if company reach 10 million, I make commission $ 500,000, rate remain the same), so my main income is from commission, not salary. This arrangement will help us to become self-motivated. In the beginning, I work 20-30 hours per week.  I arrange my time, if we get really busy, I will work full time, maybe over 12 hours per day.  If I work full time in the beginning, I project salary plus commission $ 80 to 100 thousands, do you think it is appropriate?

My work only work with repeated clients, same engineers,  need to build networking but not much sales,  need to estimate the project, submit the proposal, contract negotiation, oversee,  coordinate the job.   Inside office, I need to build, train and organize future team,  develop new market…. My job title will be vice president.

$ 1,500 is little because I understand this is new company, do you think it is fair? How is 5% commission rate?  how is bonus and ownership program?  Can  you evaluate for me what is better arrangement?  Any other website or service I can search?

Thank you.


Answer
Dear Califa,

First, you have not told me anything about your qualifications! As you may know, income is related to your qualifications and previous experience in the field.

Assuming you have what is required to become a Vice President in the company, your question is indeed a difficult one to answer since salaries, bonuses, commissions, etc. are different in different places, and I'm not sure in which country you're in! At any rate, as you've correctly put it, I think $1,500/month is too little. As far as the commission, 5% of the gross revenue is excellent, in fact, I think you'll be lucky if the company agrees to this figure! Usually it ranges from 2 to 3%. The amount of bonus is hard to determine as it is directly related to the profit realized. On average however, the bonus is not determined the way you have indicated, rather it is related to your salary. Usually, companies work out the bonus distributions as a month, two, three, etc. of your monthly salary. To make this point clear, if your salary is $ 1,500/month, the company may decide to give you either a single month, i.e. $1,500, or two months, i.e. $3,000, or three months, i.e. $4,500, etc. as a bonus. This may go up to 12 times your monthly salary, and in some occasions much higher; it all depends on: a) how good the company did in that year; and b) how much you contributed to that profit.

You mentioned a percentage paid by the company to join them. Usually, this is done if you are a competitor, and a well known figure in the industry. This figure is not subject to any standards and it is decided by the company; it depends on how bad they want you.

I'm sorry, but I'm not familiar with any website which offers such information. I think you're best bet is to check with a Management consultancy firm.

Finally, as I have previously indicated, such information is different from one place to another, and what is applicable in a certain geographical location may not be applicable in another.

Wishing you the best of luck, and always remember that: "good opportunities come to those who are willing to test unknown waters where they would either swim or sink".

Kind regards,

Dr. A. Jarkas