How To Divide Ownership Fairly When Forming A Startup

How To Divide Ownership Fairly When Forming A Startup

How does Richard Branson manage 400+ companies?

He doesn’t.

Over the years he’s learned how to build teams and split ownership in a way that drives everything forward.

In 2004, after 2 failed companies, I finally learnt this lesson.

When I started my company Spheric Technologies I started it with partners.

Why? I realized if I wanted to go far – and get there faster – I needed other people on the team that had a piece of the business.

One of the strategies I teach my high-end coaching clients ($5M+ / year in revenue) is how to build and structure teams to take on new initiatives outside their businesses.

I’m all about focus, but it doesn’t mean you can’t bring other ideas to life…

… what it does take is the right structure amongst a team to ensure it’s win-win for everyone involved.

It’s what Richard Branson does, and so can you.

In this week’s video I share how to think about ownership splits when building a new company in a way that reduces the downside when things get tough.

When I think about ownership splits, I always break it down into a few key areas:

  1. What’s the current value today? (investor valuation, or market)
  2. What would the caliber of the people be worth in the open market?
  3. Who else would be critical to bring on to make this a huge success?
  4. How much more capital would be required to get to break even?
  5. How do we test the relationships / collaboration of everyone coming together?

One of my favourite quotes by Seth Godin is “I can’t work with you, until I work with you.”

When you bring a bunch of people together that haven’t worked together, you need to quickly test their working relationships.

That’s why I always start there, even before we get into the equity splits.

Over the years I’ve been involved in starting, investing or mentoring hundreds of new businesses, so I’ve seen this play out many times.

What people fail to do is plan for SUCCESS!

When this takes off, how are people going to feel?

Most people never do that and it’s a mistake.

So, what about you? Have you done anything creative when working with partners on a new project, or business idea?

I’d love to hear your ideas below in the comments.

Hope this video finds you well!

 

  • simran sandhu

    great job….this is very helpful blog for those who want to start their own business..

    http://bplanmart.com/

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