How business partnerships work

by Peter Crocker

Can business partnerships help you grow your business without getting paid? Possibly. One way is to help a client build a business by putting the value of your expertise on the line.

Recently a long-term client of mine returned from America with a new business idea he was starting up. We met to discuss the writing of all his marketing collateral and I left the initial meeting feeling pretty excited about the business concept. This is when thoughts of possible business partnerships first came up.

After putting together a list of requirements – website, corporate profile, emails, sales letters, press releases and so on – I soon realised it would be a fairly involved project from a copywriting perspective.

Obviously a challenge in setting up any new business is forking out cash early on before there is any revenue coming in. That was when I considered an alternative that I thought may work for both of us.

I asked my client what he thought about sharing a percentage of the company (equity) in return for an agreed amount of copywriting services.

For me it provided a way to get involved in growing a new business without risking any capital. For the business owner it means they can get all the services they need without having to outlay a whole lot of cash upfront.

It also means that I am 100% motivated to get things right, because the only way I see a return on my investment in time is if the business becomes a long-term success.

Given the right trusted client relationship and business idea, this sort of arrangement is something that could work for designers, writers, business consultants, coaches, accountants, web developers and many more. In fact anyone with skills that complement those of someone starting a business.

Your accountants and/or lawyers would need to sort out the details based on your specific circumstances to make sure it’s all above board, but here’s how it worked for us in principle.

1. Agree on a theoretical value of the business.
This is difficult for a non-existent business, but we looked at things like set-up costs and the value of the idea to establish a figure. Let’s say just as an example that you agree to a current value of $50,000.

2. Agree on an equity percentage that is available.
This needs to be a figure that the owner is happy to part with, but that is high enough to make it worth your while. Let’s say that figure is 10%, which amounts to $5,000.

3. Complete services for equity.
Rather than send an invoice for cash, simply quote and work as usual, but you ‘earn’ equity for services rather than money.

When the growth of your own business growth is limited by the hours in the day, this equity approach can offer an alternative means to grow a side business while still using your core skills.

What’s that you say? You want to know what this revolutionary new business idea was? Well that’s not really the point, but I suppose if you must know…

[Shameless plug alert!]

It’s a zero-hassle way to sell on eBay called www.GoingGone.com.au. It’s essentially a service that sells goods for individuals, businesses and charities on eBay for a percentage of the sale price. They do all the work for you – take photos, write professional ads, answer customer questions, collect payment and ship the product – you just pocket the profits. It’s too early to say whether the arrangement has worked for us. But so far so good.

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