hi I’m Evan Carmichael welcome to
another edition of ask Evan in today’s
episode I’m going to answer a question
from one of my four meters Michael who’s
asking about giving equity away to start
his business up so he is create a new
web-based business and needs to get a
program on board to create a script for
him and he wants to give a piece of the
company away in exchange for creating
that script and is wondering how to do
it what’s involved my advice etc so
Michael I’d be really concerned about
giving away a piece of equity to
somebody you don’t know it’s really
really hard it’s like getting married
having a good partnership is like having
a good life and it’s something that you
are in for a long period of time so you
want to make sure you get the right
person who will be an ongoing
contributing success factor to your
business if you’re concerned about not
being able to pay him because you don’t
have money then you might want to work
out another arrangement and I’ll talk
about that quickly if you really wanted
to do the equity side then you would
need a lawyer need to set up a
corporation you need to have shares you
need to figure out how much you’re going
to give him I always try to make those
equity deals kind of opt-in so you you
earn in your equity as you produce
results so you know there’s a script
that he has to create for you then once
the script is creatively gets five
percent of the business and you know if
it delivers the results that you’re
hoping for then you guess another five
percent or whatever it is you have to
make sure that there’s kind of
milestones in there so he doesn’t just
have equity in your business and you
have a you know shareholder who doesn’t
do anything for your company as you grow
but my preferred way to do this if you
can’t afford to pay em up front would be
to have some kind of Prophet chair for
that one product line so your company
may end up doing a lot of other things
as well and now you have this this one
person owning a piece of it without
doing any other work on going if you
could do a profit chair for this one
product so make them believe in your
abilities to market this new web startup
and say 45 years of 10 years or lifetime
whatever it is you’re going to give him
twenty percent or fifty percent or
whatever it is of the profits from that
product then that’s a lot easier to be
able to do they don’t have any
decision-making power in the business
they don’t have any minority shareholder
right so you have to worry about you
have to worry about them selling their
share to your competitor and you know
snooping on what you’re doing and they
don’t have any decision-making power
which you might have to worry about if
you have somebody doesn’t really know
what they’re doing with business so
that’s would be my preferred route is
some kind of profit share plan only for
that one product line for X number of
years and the amount that they get is
maybe in relation to how much value
they’re going to be able to add and
potentially if there is going to be any
ongoing component to it so do they have
to update that script you know if you’re
a web based business and you’re not a
programming yourself you may need
somebody as part of that experience on
going to do the help you continue to add
to your product line so I hope that
helps if you have any questions please
leave a comment below and for everybody
else I’d love to hear what you have to
think about if you want to leave a
comment under the video and I always
appreciate thumbs up if you want to give
them helps me make more of these videos
and hours you’re energized when I see
that somebody slept a thumbs up in the
video so thank you for that so much and
hopefully I’ll see you in the next
episode
you
another edition of ask Evan in today’s
episode I’m going to answer a question
from one of my four meters Michael who’s
asking about giving equity away to start
his business up so he is create a new
web-based business and needs to get a
program on board to create a script for
him and he wants to give a piece of the
company away in exchange for creating
that script and is wondering how to do
it what’s involved my advice etc so
Michael I’d be really concerned about
giving away a piece of equity to
somebody you don’t know it’s really
really hard it’s like getting married
having a good partnership is like having
a good life and it’s something that you
are in for a long period of time so you
want to make sure you get the right
person who will be an ongoing
contributing success factor to your
business if you’re concerned about not
being able to pay him because you don’t
have money then you might want to work
out another arrangement and I’ll talk
about that quickly if you really wanted
to do the equity side then you would
need a lawyer need to set up a
corporation you need to have shares you
need to figure out how much you’re going
to give him I always try to make those
equity deals kind of opt-in so you you
earn in your equity as you produce
results so you know there’s a script
that he has to create for you then once
the script is creatively gets five
percent of the business and you know if
it delivers the results that you’re
hoping for then you guess another five
percent or whatever it is you have to
make sure that there’s kind of
milestones in there so he doesn’t just
have equity in your business and you
have a you know shareholder who doesn’t
do anything for your company as you grow
but my preferred way to do this if you
can’t afford to pay em up front would be
to have some kind of Prophet chair for
that one product line so your company
may end up doing a lot of other things
as well and now you have this this one
person owning a piece of it without
doing any other work on going if you
could do a profit chair for this one
product so make them believe in your
abilities to market this new web startup
and say 45 years of 10 years or lifetime
whatever it is you’re going to give him
twenty percent or fifty percent or
whatever it is of the profits from that
product then that’s a lot easier to be
able to do they don’t have any
decision-making power in the business
they don’t have any minority shareholder
right so you have to worry about you
have to worry about them selling their
share to your competitor and you know
snooping on what you’re doing and they
don’t have any decision-making power
which you might have to worry about if
you have somebody doesn’t really know
what they’re doing with business so
that’s would be my preferred route is
some kind of profit share plan only for
that one product line for X number of
years and the amount that they get is
maybe in relation to how much value
they’re going to be able to add and
potentially if there is going to be any
ongoing component to it so do they have
to update that script you know if you’re
a web based business and you’re not a
programming yourself you may need
somebody as part of that experience on
going to do the help you continue to add
to your product line so I hope that
helps if you have any questions please
leave a comment below and for everybody
else I’d love to hear what you have to
think about if you want to leave a
comment under the video and I always
appreciate thumbs up if you want to give
them helps me make more of these videos
and hours you’re energized when I see
that somebody slept a thumbs up in the
video so thank you for that so much and
hopefully I’ll see you in the next
episode
you
Please follow and like us:
Be First to Comment