I'd contribute sweat equity with $0 salary and 50% or more of profits. I was recently approached by a person who owns a retail e-commerce business to be a partner. He's already been having success selling his goods on eBay for a few years, and at one point he even had a retail showroom but moved to a smaller office due to rent increases. Currently, he wants to transition completely to selling his goods through a proprietary online store, which isn't set up yet. He has plans for how the website/online store will look and even has a developer lined up. I met this person while pitching my digital marketing services as an outside consultant, and I left with an offer for partnership: $0 salary and 50% or more of profits (he was throwing out numbers to gauge general interest). I'd be responsible for setting up the online store, moving the inventory to the online store, marketing it, and ultimately selling it. He would cover any and all costs associated with sales and marketing. I'm no stranger to making business arrangements via my consulting business, but I've never even considered such a partnership before. I'm currently unhappy with my work situation and theoretically, I'm excited about this new opportunity. I'm passionate about the product, and I'm definitely motivated by the hustle. Of course, I wouldn't enter into the agreement without some assurance of its potential for growth. What questions would you ask before making a decision?

There is an alarm bell ringing in my head, when I read your post.
First question: why is he willing to give up 50% of his profit?
He might have a very good reason, but you need to know what that reason is.
His answer might be: "I want to lie all day long on the beach drinking Pina Coladas, 40% is fine thank you very much"

That is OK, as long as you are comfortable with it.

PS: I sold 66% of my company, clearly stating to my associates what my expectations were and asking them for theirs. This is working out pretty well.

Answered 4 years ago

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