Technical Profit Share

[darrent]

I've just resigned from a previous company where I was director and shareholder. I have set up a new company with a fantastic idea (telecoms as usual). The margins are excellent and I have the contacts and skills to sell the service. BUT (always a but!) I don't have the technical resource to get this off the ground and I don't want to pay through the nose for technical people I don't know or trust. So I thought maybe there is a chance of doing a profit share (or owning shares in the company) for the right technical person/s.

Does this sounds feasible or I'm I barking up the wrong tree?

[slapmatt]

It's not a bad idea, but you have to think of the type of technical person and the type of deal you put together. Speaking from a purely selfish point of view, I'd need an income in order to pay my mortgage, bills etc on a monthly basis, but I might be happy to settle for a smaller salary in return for a decent share in the company.

It's definitely worth a go.

[Plotloss]

What sort of techie do you need?

Thats going to be the deciding factor I would have thought. If you are looking for someone with the in vogue hot skills then I would have thought that it may make your plan slightly tricky however if its something thats been around for a while that you are packaging in a new way then people may be willing to take the risk.

[boiler]

darrent said:

I don't want to pay through the nose for technical people I don't know or trust. So I thought maybe there is a chance of doing a profit share (or owning shares in the company) for the right technical person/s.

just my 2p worth, but if you don't know or trust them to pay them well - then surely the idea of them owning shares in your company is a bad idea. Giving part of your company away should be the last resort IMHO. Perhaps profit sharing would be OK, but I would want it tied down very tightly in terms of scope (ie only on the particular product developed, what about new versions/variations on original product, profit from servicing/maintenance).

Andy.

[JamieBeeston]

Sorry to hear this Darren, but Glad you've got a new Venture on the cards.

Drop me a mail if you need any info on my side of things, always happy to help a previous customer.

J

[srebbe64]

There's no right or wrong in my view.

Giving employees equity in the business can buy their goodwill emotionally (a small amount of equity can deliver a large amount of goodwill). Having said that, I wouldn't do it myself!

What about promising a small amount of equity if profits are achieved as you anticipate? As such, you reduce the risk of giving equity to lemons!

[JamieBeeston]

srebbe64 said:

There's no right or wrong in my view. Giving employees equity in the business can buy their goodwill emotionally (a small amount of equity can deliver a large amount of goodwill). Having said that, I wouldn't do it myself! What about promising a small amount of equity if profits are achieved as you anticipate? As such, you reduce the risk of giving equity to lemons!

Myself, I wouldnt offer equity easily (unless (s)he was a REALLY great asset), but instead a large % of profits and a bonus on sale (again depending on how much you need them)

But then, myself, I wouldnt get involved in anything WITHOUT a % of Equity

Its Catch 22, those who you NEED are likely to want ALOT more than those who wont offer you as much, but will do it for less.

[darrent]

It's mainly someone with basic skills (HTML, PHP, XML, Java and possibly some form of C) and an understanding of how a telecoms switch works for number administration etc. Not difficult stuff really.

[slapmatt]

In that case, I think profit sharing is a good idea. I've done work before where I get a percentage of sales, up to an agreed amount. It was with someone that I knew and could trust, but the set-up worked well for us both.