hi I’m Evan Carmichael welcome to
edition of ask Evan in today’s video I’m
going to answer question from one of my
readers Jason who’s a newsletter
subscriber and has a tech company he
spend a lot of money on outsourced
development shop to help build this
technology the relationship didn’t go so
well they stopped producing for him and
now he has an unfinished product is
running out of money doesn’t have enough
money to hire a local company and one of
my advice on what to do next to get his
kind of company going so I really feel
whew that’s a tough situation when you
don’t have you know the ability to
control your own technology then you’re
really at the mercy of other people and
that’s tough and whenever you know it’s
key people your company leave tues I
could put you in a tough situation for
you a couple ideas of three options for
you that I see first you get outsource
it again and outsourcing can work and I
do a lot of outsourced with my business
and it seemed that be very successful
for a lot of entrepreneurs just because
it in the work out once doesn’t mean it
can’t work out on going a lot of people
feel the same way about hiring people
with their company they may get burned
by the first employee that they bring on
so then the other side I’m never going
to hire anybody again because doesn’t
work well it can work you just have to
make sure you go through a process to
get the right people of the right
company on board so for you you can
still work you can look at services like
owed us to try to find somebody who has
done it before you can look it they’re
if they’re their feedback from before
how much they’ve made how long you been
with odesk com and i’ve used it to get
some great people to help me you know
outsource my business tasks so a look at
Odessa as a quick start the other thing
I would do without sourcing is start
with smaller projects so instead of
giving somebody a huge project and run
with it and that’s kind of mission
critical for you if it doesn’t work out
start on a small scale give them
something you know little and see if
they can perform with it and then if
they do perform then you can slowly give
them more and more tasks so that might
help you you know you might be able to
break down your project into smaller
tasks and give it out to different
people and see who performs the best
it’s a little more time consuming
but it helps make sure that you get the
right people on board so it’s still an
option option number two is get somebody
on your company so have somebody join
your team who has a technology
experience it’s really hard to run a
tech company without having any tech
experience and within your organization
and depending on what your eventual
long-term goal is with the business if
you wanted to sell it for example
usually the buyers want to see that you
have something in house that they’re
they’re buying that not everything has
just been outsourced so it was great for
you as well because if you get more
ideas of what you want to build with
your company you’ve got somebody you
know right next to you who can help you
build it out so finding the right person
can be tough you are giving up a piece
of your company but if you were going up
to try to raise capital you’re giving up
a piece anyway you want to make sure you
get the right person on board so I don’t
there’s anybody who you can think of
right now who you’ve done some kind of
work with before where who comes
referred from somebody else again with
any kind of partnership you want to make
sure you’re starting on a small scale
let them earn in you know somebody with
the tech background may not have money
to buy into the business and if it’s
still early stage there may not be
enough of an evaluation there for them
to buy into so it could be their time
coming in so you’ll start on a small
scale let them earn their way in let
them show themselves that they can they
can you know prove to be an asset to
your business and that you both like
working with each other because it is
like getting married getting a partner
with your business so give them
milestones so they you know accomplish
something to get two percent and then
five percent and ten percent and until
whatever goal eventually you want to get
to I make sure you have really good
shareholds agreements of that there’s a
shotgun agreement in there that you can
you know spy each other out if the
relationship doesn’t go very well but
hopefully you’ve tested the beginning
and you don’t get to the point where
you’re you know buying each other out so
that’s the second option the third
option is you can go up raise capital so
you could say you know we need another
you know X thousands of dollars people
to finish up this project go find an
angel investor give up a percentage of
your business the challenge here is if
you’re pre-sales if you haven’t finished
your actual product and you’re still in
kind of the research and development
mode
really hard to raise money and the money
that you raised you’ll get really killed
on the valuation so if you had some
sales you had some momentum then you get
a much better price you don’t have to
give as much equity up in return for the
the money that you’re giving away if you
want to try to mitigate that risk a
little bit what you can do is put it in
stages so you can say i need $100,000
say for the business I need you know
twenty five thousand dollars up front
and it’s going to be a certain valuation
and then we’re going to go out and try
to hit these milestones so we’re going
to you know make X number of sales when
we do that we need another twenty-five
thousand dollars but at a better
valuation and then you go and hit more
milestones and you get the last fifty
thousand dollars a much better valuation
so you negotiate that up front so that
as you grow with your business you’re
getting more money coming in from the
investor but a better evaluation then if
you need everything up front so I don’t
know how much you need maybe one hundred
thousand dollars maybe it’s ten thousand
dollars maybe it’s half a million
dollars whatever it is you can phase it
out with an investor so that you’re not
getting all the money up front but you
know you’re also getting much better
valuation so hopefully that helps I
think your best bet is still to try to
go the outsourcing route at the start
and try to piece it off in the little
projects and find somebody who you can
work with longer-term solution try to
find somebody local who might be able to
take an equity position in the company
has a vested interest wants to make it
work and you have somebody sitting next
to you who knows motivated to want to
keep growing this product and as you get
more ideas you have somebody who you can
turn to and they you know really want to
see it succeed and last options go out
and try to find an investor just try not
to get to kill an evaluation by spacing
up the payment periods hopefully that
helps for those watching if you liked
the video please give it a thumbs up I
love seeing those come in and if you
have any thoughts please feel free to
leave a comment underneath any other
advice that you might have or any of
your own experiences or have other
questions leave a comment under the
video and i will see you on the next
episode
you
edition of ask Evan in today’s video I’m
going to answer question from one of my
readers Jason who’s a newsletter
subscriber and has a tech company he
spend a lot of money on outsourced
development shop to help build this
technology the relationship didn’t go so
well they stopped producing for him and
now he has an unfinished product is
running out of money doesn’t have enough
money to hire a local company and one of
my advice on what to do next to get his
kind of company going so I really feel
whew that’s a tough situation when you
don’t have you know the ability to
control your own technology then you’re
really at the mercy of other people and
that’s tough and whenever you know it’s
key people your company leave tues I
could put you in a tough situation for
you a couple ideas of three options for
you that I see first you get outsource
it again and outsourcing can work and I
do a lot of outsourced with my business
and it seemed that be very successful
for a lot of entrepreneurs just because
it in the work out once doesn’t mean it
can’t work out on going a lot of people
feel the same way about hiring people
with their company they may get burned
by the first employee that they bring on
so then the other side I’m never going
to hire anybody again because doesn’t
work well it can work you just have to
make sure you go through a process to
get the right people of the right
company on board so for you you can
still work you can look at services like
owed us to try to find somebody who has
done it before you can look it they’re
if they’re their feedback from before
how much they’ve made how long you been
with odesk com and i’ve used it to get
some great people to help me you know
outsource my business tasks so a look at
Odessa as a quick start the other thing
I would do without sourcing is start
with smaller projects so instead of
giving somebody a huge project and run
with it and that’s kind of mission
critical for you if it doesn’t work out
start on a small scale give them
something you know little and see if
they can perform with it and then if
they do perform then you can slowly give
them more and more tasks so that might
help you you know you might be able to
break down your project into smaller
tasks and give it out to different
people and see who performs the best
it’s a little more time consuming
but it helps make sure that you get the
right people on board so it’s still an
option option number two is get somebody
on your company so have somebody join
your team who has a technology
experience it’s really hard to run a
tech company without having any tech
experience and within your organization
and depending on what your eventual
long-term goal is with the business if
you wanted to sell it for example
usually the buyers want to see that you
have something in house that they’re
they’re buying that not everything has
just been outsourced so it was great for
you as well because if you get more
ideas of what you want to build with
your company you’ve got somebody you
know right next to you who can help you
build it out so finding the right person
can be tough you are giving up a piece
of your company but if you were going up
to try to raise capital you’re giving up
a piece anyway you want to make sure you
get the right person on board so I don’t
there’s anybody who you can think of
right now who you’ve done some kind of
work with before where who comes
referred from somebody else again with
any kind of partnership you want to make
sure you’re starting on a small scale
let them earn in you know somebody with
the tech background may not have money
to buy into the business and if it’s
still early stage there may not be
enough of an evaluation there for them
to buy into so it could be their time
coming in so you’ll start on a small
scale let them earn their way in let
them show themselves that they can they
can you know prove to be an asset to
your business and that you both like
working with each other because it is
like getting married getting a partner
with your business so give them
milestones so they you know accomplish
something to get two percent and then
five percent and ten percent and until
whatever goal eventually you want to get
to I make sure you have really good
shareholds agreements of that there’s a
shotgun agreement in there that you can
you know spy each other out if the
relationship doesn’t go very well but
hopefully you’ve tested the beginning
and you don’t get to the point where
you’re you know buying each other out so
that’s the second option the third
option is you can go up raise capital so
you could say you know we need another
you know X thousands of dollars people
to finish up this project go find an
angel investor give up a percentage of
your business the challenge here is if
you’re pre-sales if you haven’t finished
your actual product and you’re still in
kind of the research and development
mode
really hard to raise money and the money
that you raised you’ll get really killed
on the valuation so if you had some
sales you had some momentum then you get
a much better price you don’t have to
give as much equity up in return for the
the money that you’re giving away if you
want to try to mitigate that risk a
little bit what you can do is put it in
stages so you can say i need $100,000
say for the business I need you know
twenty five thousand dollars up front
and it’s going to be a certain valuation
and then we’re going to go out and try
to hit these milestones so we’re going
to you know make X number of sales when
we do that we need another twenty-five
thousand dollars but at a better
valuation and then you go and hit more
milestones and you get the last fifty
thousand dollars a much better valuation
so you negotiate that up front so that
as you grow with your business you’re
getting more money coming in from the
investor but a better evaluation then if
you need everything up front so I don’t
know how much you need maybe one hundred
thousand dollars maybe it’s ten thousand
dollars maybe it’s half a million
dollars whatever it is you can phase it
out with an investor so that you’re not
getting all the money up front but you
know you’re also getting much better
valuation so hopefully that helps I
think your best bet is still to try to
go the outsourcing route at the start
and try to piece it off in the little
projects and find somebody who you can
work with longer-term solution try to
find somebody local who might be able to
take an equity position in the company
has a vested interest wants to make it
work and you have somebody sitting next
to you who knows motivated to want to
keep growing this product and as you get
more ideas you have somebody who you can
turn to and they you know really want to
see it succeed and last options go out
and try to find an investor just try not
to get to kill an evaluation by spacing
up the payment periods hopefully that
helps for those watching if you liked
the video please give it a thumbs up I
love seeing those come in and if you
have any thoughts please feel free to
leave a comment underneath any other
advice that you might have or any of
your own experiences or have other
questions leave a comment under the
video and i will see you on the next
episode
you
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