Quickest synopsis I can produce: I started an Internet marketing company 2 years ago. Originally did websites and social media, eventually went to just social media with success. I have 3 people working with me at this point (2 salesman on strictly commission, 1 partner with a small stake) and we've went from 6 to 11 contracted social clients in the past 90 days -- in other words, some signs of growth (not to mention the quality and size/budget of our clients is improving too). All though we still are a smaller operation as we are on track for only about 30k in sales for this year at conservative projections. We have no capital so we're very restricted financially which makes faster growth tougher. Recently I was approached by one someone (a client I did work for actually) who owns a large flower shop and flower distribution business and is also tied in with a local television station in my city. He told me he is impressed with me and what we have going and he wants to team up. He is willing to finance an office (we've been working out of my home office which certainly can't last forever) and add a few more employees in various areas. He wants to be hands on to grow the business, not so much just an outside investor. He also wants to begin offering video production in addition to the Internet marketing services as part of this company. He wants to basically hit the reset button and rebrand from the beginning but now offering a larger array of marketing services. He wants to split the company 60/40. 60 to him. This is my dilemma. I'm very excited to partner with someone who's more experienced than me and also well connected in the area which will bode well, but am I discounting what I've built? I do feel we could continue being successful without him, but I also feel the financial backing is appealing in that it's extremely difficult to set yourself up for large amounts of growth with limited capital so it would be nice. Lastly, I'm giving up the controlling stake. My dream has always been to be at the forefront of my own company, but with this arrangement I essentially fall to second in command. Am I on an ego trip to be questioning if I'm okay with that? I keep going back to the saying, it's better to have 1% of something huge than 100% of something small.... My gut tells me I can't pass up partnering with this business man and this opportunity, but I don't want to get taken advantage of either... Any and all help is extremely appreciated. Thank you so much in advance!
I've built and sold two businesses for £1M+ each. In both cases I took on outside investors.
Some things to think about:
Do you need an investor? What would you actually do with the money he’s investing? You mention an office and adding video production, but are those things you really need to have / do? What is really constraining your growth right now? Would having an office and more money actually generate more sales? You mention that you already have two commission-only salespeople, so they only cost you money if they bring in sales, so you wouldn’t need more money to get sales through that route.
If you proposed partner is into flower wholesale and distribution, they may not really be able to add that much useful expertise to your social media marketing agency.
I’d look at it this way: what’s the worst thing that would happen if you did or did not take up this offer? If you did take it up, worst case is that you lose your business and can’t do anything about it (things don’t go well, partner stops funding, business goes bust); if you turn it down, you are at least still in control of your own destiny.
Answered 10 years ago
Access 20,000+ Startup Experts, 650+ masterclass videos, 1,000+ in-depth guides, and all the software tools you need to launch and grow quickly.
Already a member? Sign in