Word of the Day : Sweat Equity

Ok, so it's 2 words.

But Words of the Day doesn't really sound as formal, educational and proper.

Sweat Equity. 

Anyone in their own business, or in a small business, partnership or otherwise will be totally familair with this concept. It generally refers to the increase in value (or equity) in your business as a direct result of the work you do in  your business.

More recently, it's become associated with employee share schemes. Where employees that contribute greatly to the value of the business become partners and shareholders as a result of their 'sweat equity', often while working for a vastly reduced salary compared to market rates.

Interestingly, there are apparently numerous ways to account for not only the increase in equity of the company , without an actual direct cash injection, but also for the quid-pro-quo associated with an employee (or the owner) doing the work.

But what I find most interesting, is discovering today, that apparently in some jusidictions a company can undertake a sweat equity issue, where the company can issue shares to employees, making them partners in the business, specifically because of their 'sweat equity' and without them having to buy the shares. And that in those jusidictions it's actually called a sweat equity issue on the formal paperwork. Who knew?  Not me.

I have learnt my new thing for today.

So there you have it.

Sweat Equity. My new favourite term.