Plan B, how to structure a working relationship - shares/commission?

**mrdonuts** · 15 March 2012, 11:15

you could grant them performance based stock options, if they are as good as they say they will have no problem accepting

**oliverson** · 15 March 2012, 11:17

Originally posted by Lewis View Post

So, I have a Plan B that looks like it has a lot of potential - I've shown the product to six potential clients, three want it and there are thousands more potential clients out there. If things went well Plan B income would dwarf contract income.

Trouble is I've got no sales and marketting experience and I don't want to give up my excellent contract in the current climate until I know my Plan B will work.

So I want to take on someone to do sales and marketting, a friend may be a good candidate but they want equity. I've spent a LOT of time over two years developing the product and they are unproven, so want them to work on a commission basis (maybe a small hourly rate as well - but I don't want to actually employ them).

How might this work? Should they just become self employed and invoice for sales services & commission? Should I take the plunge and make them a partner (worried what would happen if it didn't work out).

Any thoughts/advice appreciated.

I'd be tempted to offer them a percentage of the business. Means you don't have to pay them right now and they have a greater incentive to make it work. Also means if you have to lay out cash then they contribute as well. Other burdens can be shared too. Ultimately I'd rather have 70% of something than 100% of nothing.

**Support Monkey** · 15 March 2012, 11:20

Originally posted by Lewis View Post

So, I have a Plan B that looks like it has a lot of potential - I've shown the product to six potential clients, three want it and there are thousands more potential clients out there. If things went well Plan B income would dwarf contract income.

Trouble is I've got no sales and marketting experience and I don't want to give up my excellent contract in the current climate until I know my Plan B will work.

So I want to take on someone to do sales and marketting, a friend may be a good candidate but they want equity. I've spent a LOT of time over two years developing the product and they are unproven, so want them to work on a commission basis (maybe a small hourly rate as well - but I don't want to actually employ them).

How might this work? Should they just become self employed and invoice for sales services & commission? Should I take the plunge and make them a partner (worried what would happen if it didn't work out).

Any thoughts/advice appreciated.

Never ever ever employ/work with friends, because they will not be freinds for long, its a recipe for disaster, get someone with no association to you, and there is no way i would even entertain partnership with anyone unless they had created 50% of the idea in the first place because they will not have the commitment you have

**doomage** · 15 March 2012, 11:47

If Plan B is important to you, and you really believe in it, why not find some professional help (i.e. pay a specialist lawyer to discuss these issues).

If you make a mistake now because of 'free' advice you found on an interweb forum it could cost you the business in the long term.

Also, read some books on marketing and sales so you are at least able to communicate what you want to whomever you get to do this work. It's possible that the best way forward is for you to get someone to do the actual technical work and for you to sell it, surely no-one understands or is as passionate about the product as you. It sounds as if you have already had some success in this area.

Good luck.

**Vandalay** · 15 March 2012, 12:54

Originally posted by Lewis View Post

So, I have a Plan B that looks like it has a lot of potential - I've shown the product to six potential clients, three want it and there are thousands more potential clients out there. If things went well Plan B income would dwarf contract income.

Trouble is I've got no sales and marketting experience and I don't want to give up my excellent contract in the current climate until I know my Plan B will work.

So I want to take on someone to do sales and marketting, a friend may be a good candidate but they want equity. I've spent a LOT of time over two years developing the product and they are unproven, so want them to work on a commission basis (maybe a small hourly rate as well - but I don't want to actually employ them).

How might this work? Should they just become self employed and invoice for sales services & commission? Should I take the plunge and make them a partner (worried what would happen if it didn't work out).

Any thoughts/advice appreciated.

What about subcontracting via elance, odesk or 99designs?

**northernladuk** · 15 March 2012, 13:03

Leave your friend out of it unless he is the best and only person for the job. Potential nightmare that could ultimately ruin your business. Just IMO.

**Lewis** · 16 March 2012, 13:43

Thanks all. Lots to think about.

**contractoralan** · 16 March 2012, 14:26

If you are a member of any business support groups - like IoD, you will be able to receive guidance.

Directors Advisory Service | IoD

**lukemg** · 16 March 2012, 15:25

BE VERY CAREFUL, this seems to end in tears more often than not. SIL is currently trying to deal with employee who they gave 4% to, who wants to leave, wants to cash in or keep until business is sold etc.
BE CERTAIN you have the exit contract in place so you both know what happens if he leaves, business breaks up etc.
Is getting someone in the only route to market ? are there sales co's who can do this in the same area, trade sites, sure other people in same boat means there is demand for this.

Plan B, how to structure a working relationship - shares/commission?