And this week the markets are falling – and how! As I get older, I don’t want my finances to give me stress. That’s why with stocks I either like to hold them for a few days, for short trends, make my returns and get out and not be held hostage, or I like to hold them forever, because they are likely to be good forever – like Goblant, Google, Amazon (despite my BBC comments the big tech giants should be broken into pieces).
I take a similar attitude as I grow older with business partnerships. I am sure you’ve all faced the problem: you start work together on something then some thinks it’s all 50-50. Hmmm, hang one. You had a date, and now the other person thinks you’re not only engaged, but married and everything is to be shared, including things you were doing on your own outside of the relationship.
Business is not marriage. Here are some lessons for entrepreneurs wanting, like me, peace of mind, on their next big deal.
Where is the irreplaceable value?
Just because someone does a few powerpoints, attend some meetings, and provide some thoughts, this does not make them irreplaceable. And that means they don’t get a stake forever. With me, I have always been the brand. You can call my companies whatever you want, I am who the customer and the client know. That is irreplaceable. So that is of value. Not a powerpoint or excel ability.
Of course you want to marry me? So what?
Just because someone wants to partner with you, means nothing. Hold your ground. It does not mean you suddenly have a team. Of course they want to marry you. Do not fall into those bad dates so quickly, and before you know it, you’re engaged.
A company or a contract?
My company is mine. I know many a billionaire who hardly gave up any of their business before they were worth hundreds of millions. Peter Cruddas for one is a role model. A contract will do just fine. The reason the other person wants equity, is they want a share in all your future earnings. An economist would say, as Marx (Groucho) did – you don’t want to be a member of a club that would have you as a member – similarly you don’t want to give equity to someone who seems to keen for it, to early. They should be earning it.
Whilst I see how equity protects the other person, how does it protect you? It doesn’t – you’re married. Next they want your earnings from other projects to go through that NewCo. Do you really want to be answerable to a business partner? Have expenses approved by them?
As readers of this paper are in business or finance, I hope they will take care and caution when entering business relationships. There is no price for peace of mind. What I used to rush into, professionally and personally, I no longer do. And life is so so so much better for it.
Alpesh B Patel