On a Startup, do you track your time as an investment?
I am starting a small venture to attack a niche. It might turn in something bigger, but it all depends on the trend that I am following.
I will put some money down to hire a sales rep, but most of the work will be done by me. Will I need to track my time as an investment as well as the mony I am putting down?
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I would think yes, but the hourly billing is tricky. I often wonder about how to do this correctly too. – Genadinik 13 years ago
4 Answers
Of course you can. . . . .the question is why would you? What is the purpose. . .
Depending on the nature of the company and the business growth strategy, the value of the tracking of time spent on the start up will have varying degrees of value.
If one of the prospective strategies is to secure investment capital, and there is a hope that the incurred time will be paid out of the investment -- I strongly urge you to test that assumption. Most investors want their money to go to future growth, not to pay for what got the company to where it is at the time of the investment. they will expect that there will be a debt-equity swap prior to investment, and all of your deferred "time-based" salary will simply become diluted equity anyway.
If the goal of tracking time is to fairly allocated "sweat-equity" among the members of the launch team based our time -- then it could be a valuable benchmark which will keep concerns about the freeloader at bay.
By and large I think that you need to adopt the mindset of the owner-- they work whenever, how ever, for how ever long it takes -- -- and owners don't have time cards.
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I agree with this assessment. All I know is in my startup, I've been balls to the wall and so has my partner. I don't feel the need to always gauge it.. some weeks he works more and some weeks I work more. It all works out in the end and what really matters is that we are determined to see the biz succeed. It's like going out to eat... we normally just split checks 50/50, we don't figure out the exact dollar value. Sometimes I have a more expensive meal and sometimes he does. It all washes in the end, or close to it :) – Nick 13 years ago
You can do that :
- you track the time you spend for the company.
- you convert that time into money and bill it to the company.
- the company then loans money to you (with an interesting interest rate) to actually pay you.
In some country (France for instance), you can be given shares that correspond to the technical skills you bring in the company (regardless the money). This can be a way of giving a value to the time you invest in the beginning.
Are you looking to value your time as payment in kind for the initial stock/membership interest issuance?
I have a startup and issued the shares (to a co-founder and me) and then started working on the startup, so I do not bother calculating my time.
I do not think you can directly track your time as investment.
However you can bill your company for the services you provided. Time is then converted into monetary value.
Instead of paying yourself, you can put that as investment.
