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Minority Partner Protection (As an internet marketer)

by JMasterJ
2 replies
Hi! Quick question for someone who has worked as an internet/marketer for a satrtup... as minority partner in a company, how do you prevent yourself from simply being "fired" or dissolved?

The reason? I dont like to work on commission (as they first proposed) in internet marketing because 90% of the work is done in the first 10% time of the company's services. So either I can charge 10x the rate for my work or I think a partnership is much more realistic to the rewards of the company. But then if they do make me say, a 10% partner with commissions only on net sales above current net sales (to be fair so I only earn what I am bringing in), how do I prevent them from getting rid of me next year when the company is flourishing and they think they dont need me anymore?

Btw, I am not making any capital investment/donation, only services and time, and most of my time will be on internet marketing, and some on general marketing and business advice since I am more experienced in some things than my partner. I am favoring the partnership type of deal over commission because as we all know, internet marketing for a small site is very start heavy, and unless I charge a lot, I like the motivation factor and future payoff more than making a few bucks now. Besides he has very little sales now and very little funds, so he wouldnt be able to pay me my regular hourly/weekly rate for something like this.

Thanks!
#minority #partner #protection
  • Profile picture of the author Strasburgo
    1. Talk to your lawyer and business adviser.

    2. If you're already worried about being paid fairly, about getting your rightful share, you already have a problem. It sounds like this company can't really afford your services outright. That's why you have to basically put them on a payment plan.

    You can propose a partnership, an llc, a corporation, money on the front end and back end, but if they don't perform their end of the bargain, (and most of the time they don't) you're going to have to litigate.

    And my brethren typically take 1/3 or 40% of the haul BEFORE FEES. So a 5,000 dispute turns into 3,000 after the lawyer gets her cut, and 2200 after all of the associated fees with filing a case for breach of contract (filing fees, printing fees, service fees, copying fees, just to start) a 500k suit nets the lawyer 200k, and the client gets 300k less fees. So to get the money, you contracted for, you're only going to get 60 cents on the dollar. (and most of the time, people settle for less than that - only pushing your recovery lower)

    If you really want to make sure you get paid, you probably need to change the money flow of however this business works.

    If they're hiring you as a contractor to do job x to get the business off the ground, so that customers can pay them, and then they pay you - you should be the one taking the money from the customer first and then remitting it to them.

    That's the only way you can be sure that you get paid. (and the hot potato is now in their hands, cause they don't know if they can trust you...)

    If that option flies, run with it. But if they fall for that, you should wonder how well their business will do....

    You could structure your offer so that they can get some functionality in stage 1 for price 1. Stage 2 will be price 2. Stage 3 will be price 3. But dropping the motor and tranny into the Camaro and expecting the teenager to make good on his IOU is not good business.

    3. Talk to your lawyer and business adviser.

    Stras.
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    • Profile picture of the author JMasterJ
      Thank you for the detailed response.

      No, I am not worried at all about getting paid fairly or anything negative like that, sorry if it came of in that way. He and I are thinking the same way in this, just that he wants to go all in on this and I want to help him do it and make the most out of what I think I can.

      I just mean if I charged $50-$75 hour, for the work I will need to do, he will not be able to afford it at this time. Of course for a smaller fee I can train him how to do most of it himself but that would be a halfway of doing it and he may never see a percent of increased revenue.

      Yes I will definitely have a contract signed up for the percentage and share etc.... not sure if we will actualyl form an LLC but I told him lets start with an operations agreement and go from there after we agree to all the numbers. I wouldnt even waste my time if I didnt think the business has a future, but most of the success will actually depend on me since most of his business will be acquired online only, which of course also strengthens my position.

      If you had personable experience with this, question...... I know numbers will vary a ton depending on the business, my total role etc... but if the business involved selling security systems and I was responsible for driving traffic to the site and any other real world marketing techniques I wish to execute, is something like 35% reasonable?

      Thanks again.



      Originally Posted by Strasburgo View Post

      1. Talk to your lawyer and business adviser.

      2. If you're already worried about being paid fairly, about getting your rightful share, you already have a problem. It sounds like this company can't really afford your services outright. That's why you have to basically put them on a payment plan.

      You can propose a partnership, an llc, a corporation, money on the front end and back end, but if they don't perform their end of the bargain, (and most of the time they don't) you're going to have to litigate.

      And my brethren typically take 1/3 or 40% of the haul BEFORE FEES. So a 5,000 dispute turns into 3,000 after the lawyer gets her cut, and 2200 after all of the associated fees with filing a case for breach of contract (filing fees, printing fees, service fees, copying fees, just to start) a 500k suit nets the lawyer 200k, and the client gets 300k less fees. So to get the money, you contracted for, you're only going to get 60 cents on the dollar. (and most of the time, people settle for less than that - only pushing your recovery lower)

      If you really want to make sure you get paid, you probably need to change the money flow of however this business works.

      If they're hiring you as a contractor to do job x to get the business off the ground, so that customers can pay them, and then they pay you - you should be the one taking the money from the customer first and then remitting it to them.

      That's the only way you can be sure that you get paid. (and the hot potato is now in their hands, cause they don't know if they can trust you...)

      If that option flies, run with it. But if they fall for that, you should wonder how well their business will do....

      You could structure your offer so that they can get some functionality in stage 1 for price 1. Stage 2 will be price 2. Stage 3 will be price 3. But dropping the motor and tranny into the Camaro and expecting the teenager to make good on his IOU is not good business.

      3. Talk to your lawyer and business adviser.

      Stras.

      10
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