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    Investor Question-Need Suggestions
    We are a brand new business in our development stages. We need a lot of flash, web, and technical work done. Some of it we cannot do ourselves and need to outsource.

    We have found someone who is willing to help us out and do it as an "investment", in other words; he will do the work, keep track of what he does for us and that "dollar" amount is what he is investing in our business. We're doing this because of limited funding, obviously.

    Any suggestions on what we should offer him as a return on his investment? Double back, 150% back, etc. etc.??

    Thanks for the help


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    Personally, I'd be a little wary. I have seen these things come back to haunt: service providers later claiming that they were fundamental drivers and demanding ridiculous settlements.

    I'm not saying that is the case this time, as obviously I have no idea, but I would suggest caution.

    I would tend to agree the details up front, so that both parties fully understand exactly what will be payable later. This could even be subject to several scenarios. I'd also DOCUMENT the understanding.

    I know... it doesn't sound too friendly.... but it is supposed to be business after all, and clear understandings can prevent major headaches later.


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    investing
    Absolutely, we wouldn't do it any other way. Everything will be fully agreed upon and documented ahead of time as well as some type of a "cap" on the amount.

    I'm just not sure what is fair for a ROI...


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    Try Elance.com
    #4
    Join Date
    Feb 2006
    Location
    Las Vegas, NV - Nashville, TN
    Posts
    16
    I suggest visiting elance.com. Here you will find many web designers, consultants, writers, and etc, will to BID on your project. The GREAT thing about this service is they have an eBay like feature of client feedback and even show how much income a specific client has made through their system.

    It's free for you to post and they will serve to collect the payment, take out their fee like eBay, and pay the agreed balance to the service. Works similar to PayPal collecting the $$, serving as a middle man, and paying the consultant.

    These people do quality often work for very cheap!

    Check it out.


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    Before accepting any sort of investment, I would recommend you to have a clear agreement with him with regards to terms of investment. The agreement should be completely free of loopholes which the other party might exploit later on. Now coming on to the subject of return to him, I would recommend that you should agree only to give a percentage of profits to him and not talk in terms of percentage of the original investment because sometimes the business might run into a loss, and it would become very difficult to give him that return on his capital. I can not recommend an exact percentage because it depends upon the amount of capital he has invested and the amount of work he is willing to undertake.


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    Sounds to me like you have worked everything out and I am sure it will work out just fine. I myself have helped people like this and it works out well as long as there is a mutal understanding of expectations. It is a good idea to have a written agreement as well. Good luck!!! Hit me up if you need more help, i like helping!!


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    Your business is not even running yet, there is very little chance of calculating a realistic ROI. Two ways which I would consider: He writes down what you owe him and you pay it to him when you can... with a certain interest rate.

    Or option number two, you give him a small percentage of the company.


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    Quote Originally Posted by Out-Of-The-Box View Post
    We are a brand new business in our development stages. We need a lot of flash, web, and technical work done. Some of it we cannot do ourselves and need to outsource.

    We have found someone who is willing to help us out and do it as an "investment", in other words; he will do the work, keep track of what he does for us and that "dollar" amount is what he is investing in our business. We're doing this because of limited funding, obviously.

    Any suggestions on what we should offer him as a return on his investment? Double back, 150% back, etc. etc.??

    Thanks for the help
    This type of agreement can get tricky really quickly. I would suggest to you to save more money and professionally get the job required done without any strings attached. These type of agreement usually start as mutually beneficial but then become very damaging to your company once a little success is on the horizon.


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    Just have a lawyer go over the contract and look for anything that would put you in a bad spot. I don't think it would immediately mean he is trying to scam you guys but just to be careful...
    Also try to track his hours yourself. You don't want him claiming he worked 25 hours/day afterwards.


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    Quote Originally Posted by crimsonghost747 View Post
    Your business is not even running yet, there is very little chance of calculating a realistic ROI. Two ways which I would consider: He writes down what you owe him and you pay it to him when you can... with a certain interest rate.

    Or option number two, you give him a small percentage of the company.
    Why I always find your comments so timely? now I am a fan! I am very impressed with your comments and posts. why I say that? I actually just started my own website and I am working with somebody (who is a friend by the way) and asked him to do the online marketing through facebook. Although I have given some figures on his commissions etc, we never had in writing YET. I will be on a short break from my work and will study it further and see different pay or income sharing schemes that would be suitable in our setup. I just hope it is going to be fair and the partnership long lasting. wish me luck!


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    I just started my own website and you can find it on http://www.ofwtips.com
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