what percentage that I give my business partner so I got a great question from
partner so I got a great question from
partner so I got a great question from one of my Google+ readers love you guys
one of my Google+ readers love you guys
one of my Google+ readers love you guys Korea s Etica who wrote in and basically
Korea s Etica who wrote in and basically
Korea s Etica who wrote in and basically she has a business and wants him to come
she has a business and wants him to come
she has a business and wants him to come in and be her business partner in the
in and be her business partner in the
in and be her business partner in the company and is wondering do I have to
company and is wondering do I have to
company and is wondering do I have to give up 50% of my company to this person
give up 50% of my company to this person
give up 50% of my company to this person so here’s the thing okay you can you can
so here’s the thing okay you can you can
so here’s the thing okay you can you can skin this cat in a lot of different ways
skin this cat in a lot of different ways
skin this cat in a lot of different ways there’s no rule that says you have to
there’s no rule that says you have to
there’s no rule that says you have to give up half your company to a partner
give up half your company to a partner
give up half your company to a partner coming in for me the thing that you want
coming in for me the thing that you want
coming in for me the thing that you want to look at one is how much value is this
to look at one is how much value is this
to look at one is how much value is this person bringing is the person bringing
person bringing is the person bringing
person bringing is the person bringing equal value to what you’re bringing yes
equal value to what you’re bringing yes
equal value to what you’re bringing yes or no and then to how long has this
or no and then to how long has this
or no and then to how long has this company been around is this a just a
company been around is this a just a
company been around is this a just a startup idea where you haven’t done
startup idea where you haven’t done
startup idea where you haven’t done anything yet or have you been around for
anything yet or have you been around for
anything yet or have you been around for a little while and you’ve already built
a little while and you’ve already built
a little while and you’ve already built up something that you know that person
up something that you know that person
up something that you know that person hasn’t contributed to so obviously
hasn’t contributed to so obviously
hasn’t contributed to so obviously you’ve been around for a longer period
you’ve been around for a longer period
you’ve been around for a longer period of time a new person coming in doesn’t
of time a new person coming in doesn’t
of time a new person coming in doesn’t deserve as much as you have already
deserve as much as you have already
deserve as much as you have already built this thing up but if it’s brand
built this thing up but if it’s brand
built this thing up but if it’s brand new startup then they have a case for
new startup then they have a case for
new startup then they have a case for wanting to have a bigger piece of the
wanting to have a bigger piece of the
wanting to have a bigger piece of the pie regardless of the decision of how
pie regardless of the decision of how
pie regardless of the decision of how much percentage you’re going to give up
much percentage you’re going to give up
much percentage you’re going to give up you have to make them commit to the
you have to make them commit to the
you have to make them commit to the business this is so important I get that
business this is so important I get that
business this is so important I get that it’s exciting at the beginning okay
it’s exciting at the beginning okay
it’s exciting at the beginning okay partnerships are always exciting because
partnerships are always exciting because
partnerships are always exciting because at the start you’re you’re struggling
at the start you’re you’re struggling
at the start you’re you’re struggling right you’re feeling like I can’t do all
right you’re feeling like I can’t do all
right you’re feeling like I can’t do all this myself I don’t have the skills and
this myself I don’t have the skills and
this myself I don’t have the skills and this person has great skills that can
this person has great skills that can
this person has great skills that can help and I don’t want to do this alone
help and I don’t want to do this alone
help and I don’t want to do this alone and it’s just there’s so much pain of
and it’s just there’s so much pain of
and it’s just there’s so much pain of going it alone and so much excitement in
going it alone and so much excitement in
going it alone and so much excitement in bringing somebody new on that all you
bringing somebody new on that all you
bringing somebody new on that all you see is the good side not a lot of
see is the good side not a lot of
see is the good side not a lot of partnerships will work out all the way
partnerships will work out all the way
partnerships will work out all the way to the end and you want to make sure
to the end and you want to make sure
to the end and you want to make sure that you’re really getting the right
that you’re really getting the right
that you’re really getting the right person on board it really is like
person on board it really is like
person on board it really is like choosing a spouse okay you have to know
choosing a spouse okay you have to know
choosing a spouse okay you have to know them like them trust them love being
them like them trust them love being
them like them trust them love being around them and think that it’s going to
around them and think that it’s going to
around them and think that it’s going to work out for many many many years and
work out for many many many years and
work out for many many many years and what do you do before you get married
what do you do before you get married
what do you do before you get married you date and that’s what you need do
you date and that’s what you need do
you date and that’s what you need do with your business as well you need the
with your business as well you need the
with your business as well you need the person to commit to the company
person to commit to the company
person to commit to the company you just give them equity and that can
you just give them equity and that can
you just give them equity and that can come in two forms one they buy in they
come in two forms one they buy in they
come in two forms one they buy in they have to pay they have to pay for equity
have to pay they have to pay for equity
have to pay they have to pay for equity in your company your business is worth
in your company your business is worth
in your company your business is worth something you’re not just going to give
something you’re not just going to give
something you’re not just going to give it away they have to buy a certain
it away they have to buy a certain
it away they have to buy a certain amount at a certain price the other way
amount at a certain price the other way
amount at a certain price the other way is to earn in and so instead of just
is to earn in and so instead of just
is to earn in and so instead of just giving them X percent of the company
giving them X percent of the company
giving them X percent of the company they earn it when they hit milestones so
they earn it when they hit milestones so
they earn it when they hit milestones so remember I had a software company when
remember I had a software company when
remember I had a software company when we bring on a new salesperson who
we bring on a new salesperson who
we bring on a new salesperson who started by myself and my business
started by myself and my business
started by myself and my business partner we’re bringing on a third
partner we’re bringing on a third
partner we’re bringing on a third partner who’s going to be our sales
partner who’s going to be our sales
partner who’s going to be our sales person and he was joining relatively
person and he was joining relatively
person and he was joining relatively early on but I didn’t know him too too
early on but I didn’t know him too too
early on but I didn’t know him too too well and I didn’t want to just give him
well and I didn’t want to just give him
well and I didn’t want to just give him a piece of my company because the last
a piece of my company because the last
a piece of my company because the last thing you want to have happen in your
thing you want to have happen in your
thing you want to have happen in your business is have a guy who owns a piece
business is have a guy who owns a piece
business is have a guy who owns a piece of your company who’s just a dead weight
of your company who’s just a dead weight
of your company who’s just a dead weight who isn’t doing anything for the company
who isn’t doing anything for the company
who isn’t doing anything for the company and is it somebody you don’t want to be
and is it somebody you don’t want to be
and is it somebody you don’t want to be around and that can happen very often
around and that can happen very often
around and that can happen very often with a lot of companies so we made them
with a lot of companies so we made them
with a lot of companies so we made them earn in and you said ok we’ll give you
earn in and you said ok we’ll give you
earn in and you said ok we’ll give you up to whatever it was 20% of the
up to whatever it was 20% of the
up to whatever it was 20% of the business you are in your first 5% if you
business you are in your first 5% if you
business you are in your first 5% if you can close X number of deals within this
can close X number of deals within this
can close X number of deals within this amount of time and we set milestones so
amount of time and we set milestones so
amount of time and we set milestones so you get your first 5% when this happens
you get your first 5% when this happens
you get your first 5% when this happens your next 5% when this happens and so it
your next 5% when this happens and so it
your next 5% when this happens and so it shows it there they have to be committed
shows it there they have to be committed
shows it there they have to be committed to the business and actually get results
to the business and actually get results
to the business and actually get results for you before you’re going to give them
for you before you’re going to give them
for you before you’re going to give them equity so it encouraged you to have some
equity so it encouraged you to have some
equity so it encouraged you to have some kind of benchmark to put in if they’re
kind of benchmark to put in if they’re
kind of benchmark to put in if they’re not going to be buying in and giving you
not going to be buying in and giving you
not going to be buying in and giving you money for your shares the last thing I’d
money for your shares the last thing I’d
money for your shares the last thing I’d encourage you to do is for anybody who’s
encourage you to do is for anybody who’s
encourage you to do is for anybody who’s bringing on a partner is have a
bringing on a partner is have a
bringing on a partner is have a shareholders agreement it’s so important
shareholders agreement it’s so important
shareholders agreement it’s so important and make sure that you include a shotgun
and make sure that you include a shotgun
and make sure that you include a shotgun cause a shotgun cause basically is
cause a shotgun cause basically is
cause a shotgun cause basically is something that you write into your shell
something that you write into your shell
something that you write into your shell hose agreement that allows one partner
hose agreement that allows one partner
hose agreement that allows one partner to buy out another partner if it’s not
to buy out another partner if it’s not
to buy out another partner if it’s not working out you know for whatever reason
working out you know for whatever reason
working out you know for whatever reason it’s just not working out you’re
it’s just not working out you’re
it’s just not working out you’re fighting you’re doing all the work and
fighting you’re doing all the work and
fighting you’re doing all the work and this person is not you know doing
this person is not you know doing
this person is not you know doing anything and they own 50 percent of your
anything and they own 50 percent of your
anything and they own 50 percent of your business how do you get them out and a
business how do you get them out and a
business how do you get them out and a shotgun Clause says I will buy your
shotgun Clause says I will buy your
shotgun Clause says I will buy your shares at this price or you have to buy
shares at this price or you have to buy
shares at this price or you have to buy all of my shares at the same price so
all of my shares at the same price so
all of my shares at the same price so you get to pick the price
you get to pick the price
you get to pick the price and the other person gets to pick either
and the other person gets to pick either
and the other person gets to pick either accept the deal or buy you out so one
accept the deal or buy you out so one
accept the deal or buy you out so one way or the other
way or the other
way or the other somebody’s getting bought out of the
somebody’s getting bought out of the
somebody’s getting bought out of the business you have to be smart with what
business you have to be smart with what
business you have to be smart with what price you set but it’s important part to
price you set but it’s important part to
price you set but it’s important part to have in your shareholders agreement
have in your shareholders agreement
have in your shareholders agreement before you bring on a partner the other
before you bring on a partner the other
before you bring on a partner the other thing you might want to look at is a
thing you might want to look at is a
thing you might want to look at is a piggyback clause and that’s basically
piggyback clause and that’s basically
piggyback clause and that’s basically where if one person is a minority
where if one person is a minority
where if one person is a minority shareholder if you decide to sell that
shareholder if you decide to sell that
shareholder if you decide to sell that person can come with you so you know if
person can come with you so you know if
person can come with you so you know if you’re the majority shareholders if
you’re the majority shareholders if
you’re the majority shareholders if somebody was a minority shareholder you
somebody was a minority shareholder you
somebody was a minority shareholder you sell your business that person has to go
sell your business that person has to go
sell your business that person has to go with it
with it
with it so you don’t have one person holding up
so you don’t have one person holding up
so you don’t have one person holding up a deal so if you have a deal to sell
a deal so if you have a deal to sell
a deal so if you have a deal to sell your company that minority shareholder
your company that minority shareholder
your company that minority shareholder can cause a lot of problems for you and
can cause a lot of problems for you and
can cause a lot of problems for you and prevent the sale of the business which
prevent the sale of the business which
prevent the sale of the business which you know you don’t want to have happen
you know you don’t want to have happen
you know you don’t want to have happen so that person is dragged along with the
so that person is dragged along with the
so that person is dragged along with the sale of the company anyway a few things
sale of the company anyway a few things
sale of the company anyway a few things I think and think about get a lawyer
I think and think about get a lawyer
I think and think about get a lawyer involved but you definitely don’t have
involved but you definitely don’t have
involved but you definitely don’t have to give up 50% of your business make
to give up 50% of your business make
to give up 50% of your business make sure they’re offering value make sure
sure they’re offering value make sure
sure they’re offering value make sure they’re either buying or earning in and
they’re either buying or earning in and
they’re either buying or earning in and get your shotgun clause in your
get your shotgun clause in your
get your shotgun clause in your shareholders agreement before they sign
shareholders agreement before they sign
shareholders agreement before they sign up believe for everybody watching liked
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