how to compensate people when you don’t have any money so I got a great question
have any money so I got a great question
have any money so I got a great question recently for one of my Twitter followers
recently for one of my Twitter followers
recently for one of my Twitter followers love you guys in rich who’s who’s been a
love you guys in rich who’s who’s been a
love you guys in rich who’s who’s been a great fan for a while and i really love
great fan for a while and i really love
great fan for a while and i really love all this up he’s saying so thank you in
all this up he’s saying so thank you in
all this up he’s saying so thank you in rich his question was so I have an idea
rich his question was so I have an idea
rich his question was so I have an idea it’s going to be split between an owner
it’s going to be split between an owner
it’s going to be split between an owner and development team what is the best
and development team what is the best
and development team what is the best practice to split the percentage between
practice to split the percentage between
practice to split the percentage between these two if the owner has no money this
these two if the owner has no money this
these two if the owner has no money this is a great question and no one that a
is a great question and no one that a
is a great question and no one that a lot of people struggle with and I did
lot of people struggle with and I did
lot of people struggle with and I did too having built a few technology
too having built a few technology
too having built a few technology companies and having a team and having
companies and having a team and having
companies and having a team and having to split your percentages there’s no
to split your percentages there’s no
to split your percentages there’s no finite 1answer fits all solution but let
finite 1answer fits all solution but let
finite 1answer fits all solution but let me give you some of the things to think
me give you some of the things to think
me give you some of the things to think about so people obviously have to be
about so people obviously have to be
about so people obviously have to be paid right people obviously have to be
paid right people obviously have to be
paid right people obviously have to be paid for the time that they’re putting
paid for the time that they’re putting
paid for the time that they’re putting in feel like they’re getting compensated
in feel like they’re getting compensated
in feel like they’re getting compensated and it’s pretty common that in a
and it’s pretty common that in a
and it’s pretty common that in a start-up you don’t have cash to pay out
start-up you don’t have cash to pay out
start-up you don’t have cash to pay out right you know I have a rich uncle
right you know I have a rich uncle
right you know I have a rich uncle giving you the cash to launch this thing
giving you the cash to launch this thing
giving you the cash to launch this thing so the three most common ways one you do
so the three most common ways one you do
so the three most common ways one you do a revenue share to you do a proper chair
a revenue share to you do a proper chair
a revenue share to you do a proper chair and three you give up equity in the
and three you give up equity in the
and three you give up equity in the business and I’ll go through each one of
business and I’ll go through each one of
business and I’ll go through each one of them quickly to give you a sense of what
them quickly to give you a sense of what
them quickly to give you a sense of what you can do so the first one is a revenue
you can do so the first one is a revenue
you can do so the first one is a revenue share and this is where you’re giving a
share and this is where you’re giving a
share and this is where you’re giving a percentage off the top of every sale
percentage off the top of every sale
percentage off the top of every sale that comes in from your business so I
that comes in from your business so I
that comes in from your business so I don’t know what you’re making I’m
don’t know what you’re making I’m
don’t know what you’re making I’m assuming is some kind of software every
assuming is some kind of software every
assuming is some kind of software every time that software is sold they get a
time that software is sold they get a
time that software is sold they get a percentage off the top of the revenue do
percentage off the top of the revenue do
percentage off the top of the revenue do those five percent me that’s ten percent
those five percent me that’s ten percent
those five percent me that’s ten percent whatever it is depends on your margins
whatever it is depends on your margins
whatever it is depends on your margins right usually software has pretty good
right usually software has pretty good
right usually software has pretty good margin so you can afford a higher number
margin so you can afford a higher number
margin so you can afford a higher number but depending on what you’re making if
but depending on what you’re making if
but depending on what you’re making if you don’t have the margins you can’t
you don’t have the margins you can’t
you don’t have the margins you can’t support a high revenue sharing number
support a high revenue sharing number
support a high revenue sharing number this is great in that it doesn’t give up
this is great in that it doesn’t give up
this is great in that it doesn’t give up equity in your business and they get
equity in your business and they get
equity in your business and they get their money coming in faster soon as
their money coming in faster soon as
their money coming in faster soon as sales start happening they start making
sales start happening they start making
sales start happening they start making money which can be a good incentive for
money which can be a good incentive for
money which can be a good incentive for them one thing you might consider doing
them one thing you might consider doing
them one thing you might consider doing is a sliding scale this is something
is a sliding scale this is something
is a sliding scale this is something I’ve done a number of times with people
I’ve done a number of times with people
I’ve done a number of times with people who are partnered up with in my business
who are partnered up with in my business
who are partnered up with in my business so my business now I’m the only order
so my business now I’m the only order
so my business now I’m the only order one hundred percent of the shares I
one hundred percent of the shares I
one hundred percent of the shares I don’t any partners but I do a lot of
don’t any partners but I do a lot of
don’t any partners but I do a lot of joint ventures with different people and
joint ventures with different people and
joint ventures with different people and often is based on a revenue share what I
often is based on a revenue share what I
often is based on a revenue share what I understand is I want people working who
understand is I want people working who
understand is I want people working who who are committed to this who want it to
who are committed to this who want it to
who are committed to this who want it to be great who want to pour their hearts
be great who want to pour their hearts
be great who want to pour their hearts into it but it’s hard for them to do
into it but it’s hard for them to do
into it but it’s hard for them to do that when they’re earning ten percent of
that when they’re earning ten percent of
that when they’re earning ten percent of the money that comes in and at the start
the money that comes in and at the start
the money that comes in and at the start is not a lot of money coming in people
is not a lot of money coming in people
is not a lot of money coming in people need to earn a wage right not making
need to earn a wage right not making
need to earn a wage right not making tons of money but they need to earn
tons of money but they need to earn
tons of money but they need to earn something to pay the bills put food on
something to pay the bills put food on
something to pay the bills put food on the table and so on so what I’ll often
the table and so on so what I’ll often
the table and so on so what I’ll often do is a sliding scale and with my
do is a sliding scale and with my
do is a sliding scale and with my products and services and the programs i
products and services and the programs i
products and services and the programs i launched it may look like this for
launched it may look like this for
launched it may look like this for example the goal is to get you to ten
example the goal is to get you to ten
example the goal is to get you to ten percent of all of our sales so that’s
percent of all of our sales so that’s
percent of all of our sales so that’s ten percent i can i can afford that in
ten percent i can i can afford that in
ten percent i can i can afford that in my margins long term i want this to be a
my margins long term i want this to be a
my margins long term i want this to be a you know million-dollar your company
you know million-dollar your company
you know million-dollar your company that’s going to be one hundred thousand
that’s going to be one hundred thousand
that’s going to be one hundred thousand dollars a year plus for you as we build
dollars a year plus for you as we build
dollars a year plus for you as we build this thing up well I recognize that at
this thing up well I recognize that at
this thing up well I recognize that at the start you know this is going to take
the start you know this is going to take
the start you know this is going to take work you’re not gonna make money right
work you’re not gonna make money right
work you’re not gonna make money right away you need to earn a wage so you’re
away you need to earn a wage so you’re
away you need to earn a wage so you’re going to get fifty percent of the sales
going to get fifty percent of the sales
going to get fifty percent of the sales up front so until you earn X amount you
up front so until you earn X amount you
up front so until you earn X amount you figure out what is a livable wage until
figure out what is a livable wage until
figure out what is a livable wage until you get to that point you are in half of
you get to that point you are in half of
you get to that point you are in half of the sales and then after that it slides
the sales and then after that it slides
the sales and then after that it slides down to ten percent so it gives them an
down to ten percent so it gives them an
down to ten percent so it gives them an incentive to work harder right away
incentive to work harder right away
incentive to work harder right away you’re losing a little bit amaro to
you’re losing a little bit amaro to
you’re losing a little bit amaro to obviously at the start but you’re giving
obviously at the start but you’re giving
obviously at the start but you’re giving them a livable way to keep them
them a livable way to keep them
them a livable way to keep them motivated to incentivize they don’t to
motivated to incentivize they don’t to
motivated to incentivize they don’t to go back and get a job and then
go back and get a job and then
go back and get a job and then longer-term it still works out down to
longer-term it still works out down to
longer-term it still works out down to that ten percent or whatever you think
that ten percent or whatever you think
that ten percent or whatever you think is reasonable with your business the
is reasonable with your business the
is reasonable with your business the second is a profit share and with a
second is a profit share and with a
second is a profit share and with a profit share it’s a little bit harder
profit share it’s a little bit harder
profit share it’s a little bit harder because you’re tracking all the way down
because you’re tracking all the way down
because you’re tracking all the way down to the bottom line not just the top line
to the bottom line not just the top line
to the bottom line not just the top line it makes them start to think more like a
it makes them start to think more like a
it makes them start to think more like a business owner makes them start thinking
business owner makes them start thinking
business owner makes them start thinking about where you’re spending the money
about where you’re spending the money
about where you’re spending the money instead of just how to make more money
instead of just how to make more money
instead of just how to make more money it gives them a little bit more
it gives them a little bit more
it gives them a little bit more knowledge of how to run a business and
knowledge of how to run a business and
knowledge of how to run a business and all the things to think about but it
all the things to think about but it
all the things to think about but it means the money’s going to come in a lot
means the money’s going to come in a lot
means the money’s going to come in a lot slower right you may not make any profit
slower right you may not make any profit
slower right you may not make any profit for the
for the
for the first gear and can they go one year
first gear and can they go one year
first gear and can they go one year without making any money right some
without making any money right some
without making any money right some people can do that a lot of people can’t
people can do that a lot of people can’t
people can do that a lot of people can’t you know they don’t have the statements
you know they don’t have the statements
you know they don’t have the statements they can’t build that up but that’s
they can’t build that up but that’s
they can’t build that up but that’s another option to go if you can say
another option to go if you can say
another option to go if you can say we’re going to give you x percent of the
we’re going to give you x percent of the
we’re going to give you x percent of the profits as we build out you know that’s
profits as we build out you know that’s
profits as we build out you know that’s a little bit harder to project you don’t
a little bit harder to project you don’t
a little bit harder to project you don’t quite know how profitable you’re going
quite know how profitable you’re going
quite know how profitable you’re going to be and you have to be i would say for
to be and you have to be i would say for
to be and you have to be i would say for going that route to to be flexible you
going that route to to be flexible you
going that route to to be flexible you can have a plan but be flexible because
can have a plan but be flexible because
can have a plan but be flexible because it’s probably going to change as you
it’s probably going to change as you
it’s probably going to change as you start getting into its services and
start getting into its services and
start getting into its services and sales the third one is give up piece of
sales the third one is give up piece of
sales the third one is give up piece of the company and this is what most people
the company and this is what most people
the company and this is what most people think of you know i’m giving up x
think of you know i’m giving up x
think of you know i’m giving up x percent of my company not just my
percent of my company not just my
percent of my company not just my profits or my revenues but shares and
profits or my revenues but shares and
profits or my revenues but shares and what you’re willing to think about is do
what you’re willing to think about is do
what you’re willing to think about is do I want this person to be a part of my
I want this person to be a part of my
I want this person to be a part of my business and owned shares is this person
business and owned shares is this person
business and owned shares is this person think like a business person because
think like a business person because
think like a business person because it’s really hard to get somebody out of
it’s really hard to get somebody out of
it’s really hard to get somebody out of a company and just so much trouble and
a company and just so much trouble and
a company and just so much trouble and headache like it’s like getting into a
headache like it’s like getting into a
headache like it’s like getting into a marriage or you want to make sure it’s
marriage or you want to make sure it’s
marriage or you want to make sure it’s the right person you’re gonna spend a
the right person you’re gonna spend a
the right person you’re gonna spend a lot of time with this person you better
lot of time with this person you better
lot of time with this person you better get along you better have the same
get along you better have the same
get along you better have the same values and vision for what you want to
values and vision for what you want to
values and vision for what you want to think and happen with the business so
think and happen with the business so
think and happen with the business so with the shares there’s no right or
with the shares there’s no right or
with the shares there’s no right or wrong answer okay at the end of the day
wrong answer okay at the end of the day
wrong answer okay at the end of the day it’s going to come down to what you’re
it’s going to come down to what you’re
it’s going to come down to what you’re both happy with but some of the things
both happy with but some of the things
both happy with but some of the things to think about are one what does each
to think about are one what does each
to think about are one what does each person bring to the table so you’re the
person bring to the table so you’re the
person bring to the table so you’re the owner you’re the new the idea guy you’re
owner you’re the new the idea guy you’re
owner you’re the new the idea guy you’re the creator what you need development
the creator what you need development
the creator what you need development helps is worse coming on and being a
helps is worse coming on and being a
helps is worse coming on and being a developer for you they might say hey you
developer for you they might say hey you
developer for you they might say hey you know this two of us so 50-50 split makes
know this two of us so 50-50 split makes
know this two of us so 50-50 split makes sense to me but you may think hey you
sense to me but you may think hey you
sense to me but you may think hey you know what’s my idea I’m you just a
know what’s my idea I’m you just a
know what’s my idea I’m you just a programmer I’m going to be out selling
programmer I’m going to be out selling
programmer I’m going to be out selling this saying I need to bring on more
this saying I need to bring on more
this saying I need to bring on more people I should all ninety percent you
people I should all ninety percent you
people I should all ninety percent you own ten percent right so somewhere there
own ten percent right so somewhere there
own ten percent right so somewhere there you have to find common ground but it
you have to find common ground but it
you have to find common ground but it starts was thinking about who’s bringing
starts was thinking about who’s bringing
starts was thinking about who’s bringing what to the table right and what are you
what to the table right and what are you
what to the table right and what are you going to need to grow this into a real
going to need to grow this into a real
going to need to grow this into a real business the program isn’t part of it
business the program isn’t part of it
business the program isn’t part of it but what else do they bring or do you
but what else do they bring or do you
but what else do they bring or do you bring and the whole needs analysis to
bring and the whole needs analysis to
bring and the whole needs analysis to build a solid company you know who’s
build a solid company you know who’s
build a solid company you know who’s bringing what to the table the other
bringing what to the table the other
bringing what to the table the other thing to think about is what has already
thing to think about is what has already
thing to think about is what has already gone into this business
gone into this business
gone into this business if you’ve already put a lot of time
if you’ve already put a lot of time
if you’ve already put a lot of time effort energy ideas dollars into this
effort energy ideas dollars into this
effort energy ideas dollars into this company and they’re coming in brand new
company and they’re coming in brand new
company and they’re coming in brand new then that has to count for part of it
then that has to count for part of it
then that has to count for part of it right so when I joined my first offer
right so when I joined my first offer
right so when I joined my first offer company I wasn’t the founder I joined
company I wasn’t the founder I joined
company I wasn’t the founder I joined two or three years into the company I
two or three years into the company I
two or three years into the company I became an owner in the business but I
became an owner in the business but I
became an owner in the business but I wasn’t a full equal owner was an equal
wasn’t a full equal owner was an equal
wasn’t a full equal owner was an equal partner I had a little bit less than my
partner I had a little bit less than my
partner I had a little bit less than my other two founders because they had put
other two founders because they had put
other two founders because they had put a couple years work into when I was
a couple years work into when I was
a couple years work into when I was joining brand new when i started my next
joining brand new when i started my next
joining brand new when i started my next software company i started with a
software company i started with a
software company i started with a partner we had 50 50 each and then we
partner we had 50 50 each and then we
partner we had 50 50 each and then we brought in the new person and made them
brought in the new person and made them
brought in the new person and made them earn in they started maybe six months
earn in they started maybe six months
earn in they started maybe six months after and so we made I made that person
after and so we made I made that person
after and so we made I made that person for an in and he could earn up to a
for an in and he could earn up to a
for an in and he could earn up to a maximum of i think twenty five or thirty
maximum of i think twenty five or thirty
maximum of i think twenty five or thirty percent of the shares remember what it
percent of the shares remember what it
percent of the shares remember what it was we wanted new person earning and
was we wanted new person earning and
was we wanted new person earning and show that he was a good fit for the team
show that he was a good fit for the team
show that he was a good fit for the team regardless of what you do you should
regardless of what you do you should
regardless of what you do you should have something to protect yourself you
have something to protect yourself you
have something to protect yourself you should have some kind of agreement so if
should have some kind of agreement so if
should have some kind of agreement so if it’s the proper to revenue share that
it’s the proper to revenue share that
it’s the proper to revenue share that there’s an easy way to cancel out of it
there’s an easy way to cancel out of it
there’s an easy way to cancel out of it either of you can cancel whatever the
either of you can cancel whatever the
either of you can cancel whatever the penalties are have that written down in
penalties are have that written down in
penalties are have that written down in the contract so you’re not stuck with
the contract so you’re not stuck with
the contract so you’re not stuck with this person for a long time if it
this person for a long time if it
this person for a long time if it doesn’t work out if they’re not
doesn’t work out if they’re not
doesn’t work out if they’re not programming or if you guys just don’t
programming or if you guys just don’t
programming or if you guys just don’t get along anymore and on a shareholders
get along anymore and on a shareholders
get along anymore and on a shareholders agreement that become part of your
agreement that become part of your
agreement that become part of your company make sure you have a shotgun
company make sure you have a shotgun
company make sure you have a shotgun clause which basically means that
clause which basically means that
clause which basically means that somebody’s going to buy each other out
somebody’s going to buy each other out
somebody’s going to buy each other out if you trigger a shotgun clause you
if you trigger a shotgun clause you
if you trigger a shotgun clause you could say i’m going to buy your shares
could say i’m going to buy your shares
could say i’m going to buy your shares for this amount of money or if you say
for this amount of money or if you say
for this amount of money or if you say no you can buy my shares for that same
no you can buy my shares for that same
no you can buy my shares for that same valuation and to make sure that one of
valuation and to make sure that one of
valuation and to make sure that one of you is going to be out of the business
you is going to be out of the business
you is going to be out of the business but you have to have something like that
but you have to have something like that
but you have to have something like that in just so that you’re not stuck forever
in just so that you’re not stuck forever
in just so that you’re not stuck forever with a partner who doesn’t work out I
with a partner who doesn’t work out I
with a partner who doesn’t work out I know it’s it’s challenging it’s tough
know it’s it’s challenging it’s tough
know it’s it’s challenging it’s tough and each negotiation is its own bear
and each negotiation is its own bear
and each negotiation is its own bear that you wrestle with but hopefully that
that you wrestle with but hopefully that
that you wrestle with but hopefully that helped shed a little bit of light if you
helped shed a little bit of light if you
helped shed a little bit of light if you do revenue share profit share or send it
do revenue share profit share or send it
do revenue share profit share or send it to the company and then help them figure
to the company and then help them figure
to the company and then help them figure it down to what percentage you’re going
it down to what percentage you’re going
it down to what percentage you’re going to give up for those are you watching I
to give up for those are you watching I
to give up for those are you watching I love to know how you’ve done deals in
love to know how you’ve done deals in
love to know how you’ve done deals in the past
the past
the past leave a comment below let me know if you
leave a comment below let me know if you
leave a comment below let me know if you have a business part now how you split
have a business part now how you split
have a business part now how you split it up if you’ve done revenue shares and
it up if you’ve done revenue shares and
it up if you’ve done revenue shares and so on i love to hear from you and add
so on i love to hear from you and add
so on i love to hear from you and add some more contacts if you want to leave
some more contacts if you want to leave
some more contacts if you want to leave a comment if you like this video give it
a comment if you like this video give it
a comment if you like this video give it a thumbs up and you want to see more
a thumbs up and you want to see more
a thumbs up and you want to see more like this click on my face subscribe to
like this click on my face subscribe to
like this click on my face subscribe to the channel thank you so much I’ll see
the channel thank you so much I’ll see
the channel thank you so much I’ll see you soon
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