I need your opinion(everybody)

siscooo · Sep 1, 2018

Hi Guys, i wanted to have a honest opinion from you regarding a case i’m not sure how to proceed further.
Okay the case is this: i have this good friend who bring me a great client and somehow enabled me to have meetings with them and show what i can do for them. Now i need to start a company hire some people and deliver the results they expect from me. And my question is what would be fair play from me to him(his wish is clearly to be part of company), in terms of sharing company profits from now because the projects will be going in the future aswell. So Basically i will be doing all the work and he will be chilling. I’m thinking of leaving 30% of company to him!

Share your opinions....

BearTank · Sep 1, 2018

I would go more like 10% referral kick back...

It largely depends on how much money there is to be made, how much work you will be doing to appease the client, and whether he could interfere with your relationship with the client. Once again, I would go with 10% on this one and 10% on any additional clients he may bring you.

Good luck

methodcreator · Sep 1, 2018

Yes, 20 to 30% will be good for him since he doesn't involve 80% in solving the problem

siscooo · Sep 1, 2018

BearTank said:
I would go more like 10% referral kick back...

It largely depends on how much money there is to be made, how much work you will be doing to appease the client, and whether he could interfere with your relationship with the client. Once again, I would go with 10% on this one and 10% on any additional clients he may bring you.

Good luck

I have modified the topic a little bit because wasn’t clear enough with situation actually, can you pleas check again?!

siscooo · Sep 1, 2018

methodcreator said:
Yes, 20 to 30% will be good for him since he doesn't involve 80% in solving the problem

I have modified the topic a little bit because wasn’t clear enough with situation actually, can you pleas check again?!

runners123 · Sep 2, 2018

Pay him a part of the profit for this job only and not part of the firm, or hire him to get clients or something like that. Giving him part of the firm for one client is crazy

siscooo · Sep 2, 2018

runners123 said:
Pay him a part of the profit for this job only and not part of the firm, or hire him to get clients or something like that. Giving him part of the firm for one client is crazy

It’s not just one client, it’s a chance for me to start a big company. I haven’t the chance before to have a company not that i can’t handle but i just had not the proper client till now. So this chance came from him. And to respect him for bringing this to me, i think it’s fair to leave a part to him, but ofc a reasonable part.

Stavro · Sep 2, 2018

Even after your edit, I'll second @BearTank's advice. You are the one investing in the business, you are the one doing all the work, so why should someone else be entitled to 30% of your lifetime earnings? Give him a referral fee and leave it at that.

Business partners are risky enough, and doing so with friends and family rarely ends well. You're already seeing the red flags here, "i will be doing all the work and he will be chilling", so what makes you think that will ever change?

BHSEONewb · Sep 2, 2018

If he's just chillin' and not providing any benefit aside from the first client, I'd say between 10 and 20 percent. If he's out there hustling for clients, then that would be a different story. That could be closer to 25 or 30 percent with a cash bonus per deal (maybe structured as a percentage of the contract instead of a flat fee, that way he'd be motivated to go after large clients instead of smaller ones).

shiva990 · Sep 2, 2018

give what you feel is right, analyze the situation for a few months, then make changes along!

Stavro · Sep 2, 2018

shiva990 said:
give what you feel is right, analyze the situation for a few months, then make changes along!

Giving away a portion of the company isn't something you can unilaterally reverse, if OP gives away 30% of his company his only way out will be to completely dissolve it and start fresh.

LastKings · Sep 2, 2018

In all honesty you should try to make a barrier between your business and your friendship together.

Giving him a big check every month without him doing any hard work doesn’t make him work more, the opposite will eventually happen.

I would pay him on commission with added milestone bonuses.

SergioRamot · Sep 2, 2018

Why not instead of 30% ownership make 40% referral commission ?
Simple as that

Babalot · Sep 2, 2018

Well your friend introduced you to the client, and now you will start working in the proyect, you will be doing everything and paying the costs etc, i suggest to give him between 5-10% because remember he introduced you the client, without him you wouldnt be able to start your proyect, i think is very fair to give him between that %.

Wish you luck with your new proyect!

BlogPro · Sep 2, 2018

If I were you - I'd give him two options

1. 30% Referral Fee for this and every recurring payment from the client. (Make sure you calculate this when running your profit numbers)

2. 10% in the form of equity in the company. (Equity does not mean share of profits - don't use terms such as "perpetuity") - he gets to own 10% of the company. He's not entitled to a salary. You are, since you run the show. He can choose to stick to his equity and sell it later, when you raise rounds and receive a formal valuation. Or sell it back to you at a later date, where he pays for a formal valuation out of his own pocket.

He'll receive payments, if you choose to issue dividends at a later date. (Please note that dividends are only paid out from your bank balance ONLY after all mandatory expenses are paid out).

The only reason I am providing the second option is because it's clear that this amount to a considerable sum. It is one of those cases, where one high-ticket client basically turns a freelancer into an agency. And since he's the catalyst, he's entitled to a fair share.

Edit - If you go with Option 2, make sure you build an iron-clad agreement that makes him a sleeping partner. Avoid giving him access to any company assets etc.

bdman · Sep 2, 2018

Listen to your heart.

take him with you. Not every people have good friends. You're lucky you have one. discuss with him what you want and what he want. problem solve.

Thanks

virtualpurity · Sep 2, 2018

You are thinking of giving himi 30% of your company just because he brought you your first client ?
That is insane, that would mean that every other deal you make even without him and every profit you make from your company would have to be shared between you two for LIFETIME, and you`ll be doing all the work.

I suggest you cut him on the deal only with 20-30% that he found for you, no reason to give him a % of your own company..
If he would invest his time in the company like full time searching and bringing new clients than that is a different story. If not i would say you just cash him 30% of your first deal.

siscooo · Sep 2, 2018

Thanks everybody, i really appreciate it.

JFoulds · Sep 2, 2018

BlogPro said:
2. 10% in the form of equity in the company. Equity does not mean share of profits.

Uh, that's literally what equity entitles you to. A share of company profits.

Giving him equity in your business is insane. Pay him a referral fee commission for this individual client he brought you. Alternatively, if he's still keen on working with you into the future and you'd like to reward him with some of the business, develop a stock option plan with a vesting schedule to encourage this, contingent on continued employment by your company.

Aeroslim · Sep 2, 2018

Read above guy said creating barrier between business and friendship. If so that opportunity would not come at you in the first place.
Now the way I see it, your friend seems smart. He made a big thing for you, remember he could negotiate it but he went along with a simple "wish" which can or can not happen. My point is, he doesn't seem dumb enough to get a lifetime payroll for chilling so either you not explaining it right or you don't value his part.

I need your opinion(everybody)

Junior Member

Newbie

BANNED

Junior Member

Junior Member

Registered Member

Junior Member

Senior Member

Regular Member

Power Member

Senior Member

Registered Member

Regular Member

Junior Member

Elite Member

Elite Member

Elite Member

Junior Member

Power Member

Newbie

Main Menu

Marketplace

Making Money

BlackHat World