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What percentage should I offer my friend who wants to be a partner in my company?

Discussion in 'Making Money' started by mqs1000, Jul 25, 2013.

  1. mqs1000

    mqs1000 Power Member

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    I started a company/website doing web design, SEO, rep management, social media management, the usual. I've gotten a few clients so far and I still haven't even made the website public or gone public or advertised. I plan to in a few weeks.

    My strong points are anything IT/Computer related. My weak points are cold calling, dealing with people, and making sales. So it's always been in my mind since I started my company to hire someone / make someone a partner who would cold call, send letters, and just generally be in charge of all sales and marketing.

    Coincidentally my friend who has had experience cold calling for an SEO company successfully asks me to day to start an SEO company with him (didn't know I had my own.) So initially he wanted 50/50, but now that he knows it's my own company, he'll settle for less.

    What percentage would you offer a partner if they completely handled all sales, client management, marketing, etc?
     
  2. TheeAriGrande

    TheeAriGrande Regular Member

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    It really depends on how you split up the work. It seems like you guys are splitting the work 50/50 so it's only fair that the company is split 50/50. However, if you are doing more work or are putting more money into the said company then you could go for something like 60/40.
     
  3. SPQR

    SPQR Elite Member

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    If your friend is closing all the sales, I would say he should get around 55%. Like said before me, whoever you feel is putting in more hours should be up to you. See how things go, and in the future you can change payments a bit; depending on circumstances.
     
  4. mqs1000

    mqs1000 Power Member

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    Well I feel like I'll be doing more work than him. I'm handling all the functionality. I'll be making the websites until I get overwhelmed then I'll outsource it and deal with them. Same thing with SEO, rep managament, and all that.

    He'll be doing the marketing / sales aspect of it which at this point just involves cold calling.
     
  5. mqs1000

    mqs1000 Power Member

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    I feel like it would take him a day to close a sale, but it will take me 2-3 weeks to build a website. That's the way I see it. Does it deserve 50% for a day of work when I'm working a few weeks?
     
  6. mqs1000

    mqs1000 Power Member

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    Also, how much better of a conversion is it for cold calling as opposed to just sending out letters / emails?
     
  7. Xp3r7

    Xp3r7 Regular Member

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    He absolutely deserve 50%. You better change your point of view because without someone to sell your services, you're nobody.
     
  8. xrfanatic

    xrfanatic Jr. VIP Jr. VIP Premium Member

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    If I were you I wouldn't do business with your friend as long as you want to be friends. Business + friendship does not go well together.
     
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  9. Jackmitch

    Jackmitch Regular Member

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    It sounds like you're looking for an employee instead of a business partner. A partnership won't work if one of you undermines the other. You aren't paying him/splitting with him only for the work he does but also the experience he's had.

    Example:

    Irate customer: "Just take care of this piece of code/car problem/design for this price already; it only takes somebody 15 minutes handle this."

    Professional: "Correction: It takes somebody with 'x' amount of experience in this field to take care of this in 15 minutes."
     
    Last edited: Jul 25, 2013
  10. dkh1978

    dkh1978 Regular Member

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    I think it´s not this straight forward, because usually client or account management is wanted to be something long term as well, and if this person is really responsible for all client interaction, it´s definitely not just closing one sale, which alone can consist on meetings, negotiations etc.

    The OP said that at this point this other person´s role would only include cold calling, but when he gets leads from these cold calls, and wins clients, somebody has to also manage these clients and retain them as long as possible of course. This means that he would be responsible for a client for the whole "life cycle" of the client, which makes it already quite an important position in the company. Like the OP said, the operation side could be outsourced (at least partly), but again it might not be that straight forward with the sales / account management side...
     
  11. Seankearns

    Seankearns Jr. VIP Jr. VIP Premium Member

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    I would never give him 50% you started the business, you have clients already. You've, I assume, put money and time in so far. You can also hire salesmen that aren't a friend.

    Before you agree to any percentage though I'd ask if you can fire your friend and still remain friends. If the answer is no,I wouldn't partner or hire him.
     
  12. partymarty4870

    partymarty4870 Elite Member

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    doing the works the easy bit - and it gets easier the longer you do it as you build your experience, templates, image collections etc. It's finding a new and constant stream of customers that makes SEO a bitch.

    either do it 50/50 for everything, or give him a larger cut of new saless and you take a larger cut of maintenance/repeat business.
     
  13. Jackmitch

    Jackmitch Regular Member

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    This is absolutely true and I've experienced this twice. Unless your friend shares the same amount of dedication as you and is as motivated as you, working with friends does not go well together.
     
  14. mqs1000

    mqs1000 Power Member

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    He's definitely motivated and as ambitious as I am. And he's a lot more of a people person than I am.

    What about offering a percentage with a written promise to increase it over time as he takes on more responsibility. Starting at 30%
     
  15. Jackmitch

    Jackmitch Regular Member

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    Sounds okay to me (given what you said his initial responsibilities would be) but you should talk it over with him instead of us. If he is good at sales, he'll surely convince you for a higher cut (and if he can do that, then he should be making you plenty of money soon enough.)

    In any case, it sounds like a winning formula and I wish you the best in all your endeavors.
     
    Last edited: Jul 25, 2013
  16. Execute

    Execute Supreme Member

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    Offer him commission, so like 35% for every sale he makes, then like 20% recurring every month or just put % with profit margins, then you do not have to worry as much about expenses.

    Also for people in sales, commission does make them work a lot harder so almost a win-win.
     
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  17. SPQR

    SPQR Elite Member

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    Very true. My dad did some bookkeeping for a buddy's business, and something went wrong. They are no longer friends.
     
  18. netmoney1

    netmoney1 Executive VIP

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    Keep 100% of your company. You don't need a partner. You need a sales rep. Also....the fastest way to lose your friendship is to go into business together.
     
  19. imlol

    imlol Regular Member

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    If it's a friend make sure you have a shotgun clause.
    http://en.wikipedia.org/wiki/Shotgun_clause

    As netmoney1 said, you need a sales rep. I would offer a percentage for each customer. Not a percentage of the company.
     
  20. Furious George

    Furious George Supreme Member Premium Member

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    Offer him 25% of the net profit of the business he brings in.

    Now you've hired your first sales person who things he's a partner.

    Part of his job should be recruiting more sales people, and paying him 5% of their earnings.

    See where you're going with this?