Should You Find a Business Partner?

Summary

• The most expensive equity you give away is on day one. Be cautious about offering equity too early.
• Only partner if someone has money, skills, or time that you don't have.
• Equity splits don't need to be equal. One person can be a 90% owner and another can hold 10%.
• Assess the risk you take. If neither partner takes a paycheck, uneven splits are tougher to sell.
• Paying a person can reduce their equity stake. For instance, pay someone and offer them 2%.
• Needing skills like bookkeeping doesn't mean you need a bookkeeping partner; hire them instead.
• I prefer starting on my own, getting cash flow, then bringing in someone at a discount.
• Once you have people paying for your idea, the business equity becomes valuable.
• At that valuable stage, you can give away a little equity to attract a really good person.

Video

How To Take Action

Implementation Strategies for Small Businesses, Entrepreneurs, and Personal Growth

Caution with Early Equity

• Don't give away equity too early. The most expensive equity you give away is on day one. Wait until your business has proven some value before offering equity.

Strategic Partnerships

• Partner selectively. Only bring in partners who bring money, skills, or time that you lack. Assess whether their contribution justifies the equity you’re giving up.
• Flexible equity splits. Equity splits don't need to be equal. It's okay for one person to have a majority stake, like 90%, and another to have 10%. This can be especially useful if one partner is taking on more risk.

Pay Instead of Equate

• Consider paying over partnering. If you need a particular skill like bookkeeping, it's often better to hire someone rather than give them equity. Pay them a salary and offer a small equity stake if needed.

Building Foundations First

• Start alone and build cash flow. Begin your business alone to generate cash flow. This makes it easier to bring in talented people later at a lower equity cost.

Equity at the Right Time

• Keep equity valuable. Once your idea is proven and people are paying for your product/service, your equity becomes more valuable. At this point, you can give away a small portion of equity to attract high-quality talent.

Low-Cost, High-Value Actions

• Leverage freelancers for specific tasks. Instead of hiring full-time, use freelancers or part-time help for tasks like marketing, sales, or bookkeeping. This keeps costs low and retains equity.
• Measure risk vs. reward. Pay close attention to the risks you're taking without a paycheck compared to the contribution of your partner. This will help determine a fair equity split.

Full Transcript

if you're starting a business the most expensive Equity that you ever give away is day one and so unless somebody has money you don't have skills you don't have or time you don't have you shouldn't partner if you do decide to partner because you do have somebody's really good product or somebody's really good at marketing and sales the split on the equity doesn't need to be equal so one person can be a 90% owner and somebody else can be 10 the question is just how much risk you take on if neither of you take a paycheck and one is 90 one is 10 a tougher sell but if you pay somebody then you can give them 2% I need to have books like bookkeeping it doesn't mean I necessarily need to partner with a bookkeeper you pay the bookkeeper I would almost always rather start things on my own market and sell get a little bit of cash flow and then bring someone in at a big discount because now I already have a working model and there's a huge gap between I have this idea and I have people paying me that as soon as this thing happens all the equity in the business now becomes valuable which means I need to give a little bit away to get a really good person