Yea, this is the right answer IMO. Take on as much work as possible and use the profits to fund future growth and pay himself W2 earnings not to exceed the cap rate. Then, after the terms earning cap has expired, he’ll be setup to earn more. It’s a really unusual situation and quite fortunate. He could potentially create quite a strong business over the next 15 years. Since he is really forced to pay others for work that he himself could do, he may find out that after 15 years his labor contributions are not even necessary for the business to continue. He might be in a perfect position to sell out entirely.
I had a construction related business and I found that the exact opposite approach worked best for me. Every employee was encouraged to build relationships with every customer. I would tell them that they should be the customers advocate first and in situations where business profitability might be negatively impacted, I would weigh in, and be the “bad guy” if necessary. I told them that their job security was based largely on the level of customer satisfaction with their role. The best praise an employee could receive was a comment like this “I don’t need to talk to the owner, because I know you are able to help solve my problem”. My employees also knew that if a customer voices their concerns about a specific employee, it’s a big deal.
The bottom line is that you (the owner) are really going to limit your business growth potential, if you insist on holding all of the cards. It’s just a short sighted approach IMO. Is there a risk that an employee who has unrestricted access to customers could leave to go to a competitor or start their own business, sure. As an owner, you have to view that possibility in the same way that you view all potential competitive factors. Over the 18 years we were in business some of my employees did leave to start their own business or work for competitors. I maintained friendly and professional relationships with them as well. When they left, the door opened for someone else to step up, take more responsibility and earn more money.