Beware of Shared Ownership
When choosing a business partner, Seth suggested the following guidelines:
- Avoid giving away too much business stakes earlier on for acquiring business partnership.
- Avoid exchanging business stakes just for acquiring ideas. Ideas by themselves are not worth much, actual, successful execution is. If necessary, promise lump sum payment after the concept has been proven, instead of offering perpetual shares of the business.
- Put agreements down in writing. Structure the deal, so all partners can exit the contract without putting the business in harm’s way.
- Structure the business deals with specific measurements that will reward the partner who made the most significant contribution ends up with more share.
- Be clear and agree on who and how the business will make decisions. “Never, confuse profit participation with governance,” said Seth.