Hi. I got a tiny company ( almost brand new, less than 100 customers) and I do subcontract work for an established company at 40%
The owner wants me to come work with him full time for 50% when it’s his clients and 60% when they are clients I found for him.
In exchange, I get all the work in a territory, the use of a truck, all the systems and tools.
I do promotion for him and develop the market.
Do you think I should take the deal or should I continue developing my company (competing with him on my territory) and getting 100% of my revenues. I’m still small but slowly getting bigger.
I wouldn’t take that deal on principle. I’m in business for myself because I want the full reward for my hard work. Developing someone else’s brand like that means you take home 60% of the reward for 100% of the work.
Wow, that’s a pretty good deal. But it depends on what you want to do. If you want your own brand and after 5-10 years be known in your area, then build it yourself. There’s something to be said for building your own thing.
However, if you need to provide for a family this isn’t a bad way to go and then maybe later build it yourself or buy this guy out with a percentage of profits over a set period of years.
Are you really taking 100%? Do you have a paid for truck and equipment? Insurance?
We all like to think we take 100% but after expenses and if you have to float workman’s comp for an employee, you’re already down 20-30% depending on how you run your business. So 50% of a lot is way more than 70-80% of a little.
But 100% of his revenues are working to his advantage now. Seems like the other guy is trying to cuckold him. If he can’t/doesn’t want to reach that area, the service will suffer without him. Sounds like his business is golden.
I’d say let him overextend himself like it sounds like he is and pick off his accounts as they suffer from inevitable no shows and rushed work.
interesting possibilities. be careful of non compete clauses that basically stop you from doing business in the area if the deal falls apart
10% is not enough to develop the market, it’s nice if someone walks up as doing a job but not enough to develop.
really i think the agreement is the key, if it is good for both but then also your own satisfaction with being fully selfemployed or not.
% don’t mean a lot to me without $ figured in to the equation…
I think you have to break it down and look at the $, at what you could make
with him and by yourself, then compare. It helps to know what you want/need for your goals, your lifestyle.
If he is only offering you a % rather than a wage AND a %, then why would you want it?
He is taking little risks and taking ALL the rewards of your work. You’ll likely be a 1099 employee and be responsible for all the taxes.
Sounds like a good way for him to use you to build his business and leave you without a business or a way to generate income (non compete I’m sure will be part of this), then when he doesn’t need you, to toss you to the curb.
In the agreement, he pays, with his 40%:
Receptionists, marketing material, tools, cars,etc.
He is on the top 3 on google for the local market and brings a lot of customers that way.
I was thinking about it today and where I see that it would rub is when I will want to bring in help because I don’t intend on being a technician all my life and there is so much I can do by myself.
Who will pay for the techs that will work with me or in my territory?
From what he is telling me, also, he is ready to put in writing giving me a % of the company in 2 to 3 years. My guess is 20%.
He will get back to me today about past year’s income.
You are right, I would keep being a sub-contractor for him through this deal.
I would keep building my own company. There is NOTHING like being your own boss.
Advantages:
You work when you want
You can work 3 days a week if you want
You can go on vacation when you want
Eventually you will be able to pick and choose the jobs you want
And the list goes on and on…
You have worked hard to build your brand. Keep at it my friend.
