[RHayden]

I don't know, the 42K is relevant to location. Would be top end here in the sticks but low end in other locales. For a 300k business a great deal of this salary has to be coming from net profit unless the owner is mostly absentee.

If you are going to encourage an employee to "try it on his own" make sure they've signed off on a no compete. Last thing you want is another competitior who already knows your clientele on a first name basis and is privy to your pricing structure and procedures.

Are you sure he is "replaceable", at least at the moment? Granted, no one is irreplaceable in the long term but how badly would you stumble if he walks tomorrow? Do you have a plan in place in case he does? Any one of my key guys could step in for any other if needed but I doubt the transition would be totally seamless even with all of their experience.

As far as compensation, try a small increase in base wage with quarterly production bonuses tied to production and profits. The more the company makes, the more he will make. It works well for us and keeps everyone focused.