What percentage should I give my business partner? I received a question from one of my readers, Etica, who wants to bring in a partner for her business. She is wondering if she has to give up 50% of her company. Well, there are different ways to approach this. There is no rule stating that you must give up half your company to a partner. - The first thing to consider is the value that this person brings to the table. Are they contributing equally to what you have built? Also, the duration for which the company has been established matters. If it is a startup, where you haven't made significant progress, the new partner may have a stronger case for a larger share. However, if you have been operating for a while and have already achieved something without their contribution, their share should be smaller. - Regardless of the percentage you decide to give, it is crucial to make them commit to the business. Many partnerships fail because the wrong person is brought on board. Selecting a partner is similar to choosing a spouse; you need to know them, like them, trust them, enjoy their company, and envision a long-lasting partnership. Just giving them equity is not enough. You can structure their involvement in two ways: buying in or earning in. - Buying in means they have to pay for equity in your company. Your business has value, and you shouldn't give it away for free. They need to purchase a certain portion of shares at an agreed-upon price. The other option is earning in. Instead of immediately granting them a percentage, they earn it when they achieve specific milestones. - For example, when my software company brought on a new salesperson, we made him earn his equity. We...
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Video instructions and help with filling out and completing Form 8865 Partnership
