A tech business as cofounder?
Dear all, I’m struggling to make the first big decision for my business. I want to build a complex website, but I don’t have any experience in webdesign. So I found a webdesign firm that are building it at the moment. They offered me a partnership where they would own 25% of the equity. In return they would handle the tech site of the business as well as online marketing. I don’t really see a lot of downsides to this offer, but then again this is my first project to set up a business. Do any of you have advice for me? Thanks in advance!
What company have you used to have you website built?
this is a service we currently offer, as it is almost a win-win situtation. As the client you get a website (and any other services the company offer) in return for a percentage of your business. The service provider then has a reason to make you business a success, or they won’t make any money.
Maybe add a clause that allows you to buy back the 25% at a set cost in future? i.e the cost the work would be plus some extra for the risk they are taking on you.
Dan Taylor Director of Search www.seowned.co.uk
Personally it’s not something i would consider, i know when i first wanted an online business to achieve what i wanted the price was huge..
My problem would be that you are giving somebody your business, they have complete control over your site and the online side of your business. What if you ever fall out?,
There is no reason why they couldn’t just set up something better than what they have given you tomorrow and start operating and become your competitor.
Personally i would be very careful of sharing my business ideas, and information with a company id din’t know personally.
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I have read this with interest.
I think a lot comes down to how you manage your relationship with the web design firm and what is agreed in your contract and does giving away 25% of your online business work for you.
I can imagine in some situations not having the hassle of doing the online work and having a company take care of this for you while you concentrated on the main part of your business could be to some of great benefits.
Did you actually try this and what are your results so far?
And Seowned i would be interested to have a chat with you about this.
I would be wary of an equity offer in this situation – I’d much rather price the work and work to a schedule.
This way you can be assured of what is being delivered and there is no legal work.
It wouldn’t be something I’d be comfortable with but it depends what you want out of it.
You would be able to find lots of standard web design and IT firms that would just build your site for a fee and you would own 100% of business, you are just buying their product, I.e. their web building services. Alternatively you could try a local college in case someone wants some work experience for a trial site to test??
Carrie ______________________ www.businessbehaviour.net
If the business is geared to being online then you’re probably going to need all the tech and online marketing expertise you can get. It’s not just the initial setting up, the ongoing maintenance, scaling up and promotion will be really important.
If you have a relationship with a partner who truely cares about the business outcome, then things could work well. But you should definitely have a solid agreement in place for any eventuality.
What is everyone’s obligations?
How can these be measured?
Can the agreement be terminated? If so, on what grounds and how?
Is there a clause to stop them opening a competing business?
Who owns the customer data?
What’s the procedure if there’s a disagreement?
Can the agreement be modified? How would this work?
The list goes on….
Probably you’d want to get some legal advice on these kinds of things.
Makes everything really clear and makes everyone rest a bit easier.
I have a similar problem although any I’ve not yet taken the plunge and agreed a deal with any website/developer. My advantage is that I have actual products, not a service, and will maintain sole control over them . . . which should ensure a harmonious working relationship as without my products the website would be useless, and without the website my products would be useless (online at least).
I agree with ‘Blain’ in the previous post though, your online business would be ongoing and requiring so much more than the initial website construction, such as constant marketing, seo optimisation, maintenance, social media input, etc, etc. So it works both ways and both parties have to reach agreement and understanding.
Incidentally, I would welcome talking to someone with good general experience of all the above, and particularly of YouTube. I have an abundance of totally exclusive, unique content that I have been assured by several developers in the know would go viral instantly.Have also been told by the same people I am missing out on millions in lost online revenue by not getting off my arse and doing something about it now
If anyone wants a chat, please leave contact details. Will then forward you some web links so you can see for yourself. You wont be disappointed I guarantee.
I’m a little concerned, you mentioned that they are "building it at the moment."
Do you have a partnership agreement in place? If they started work without a formal agreement, I would be nervous. Why are they so keen to get started on your site without any formal agreement in place? I hope I’m wrong, but it sounds to me like they’re desperate for the work! It might be that you just want to set up a limited company and make them a shareholder with 25% of the shares. (This isn’t my area of expertise, so do some research or get some legal advice.)
I would avoid this and find away to raise the funds to pay a different company to build the site.
If they have started work on the site, you should immediately ask them to hault work until you have a formal agreement in place. You need a partnership agreement asap!
Maggie Langley Startup Assistant 08435 570036 www.startupva.co.uk