How to split money on a start-up business with 3 Co-Founders!
2 other guys and myself decided to put together a young mens online magazine. We collectively came up with the name, but I came up with the concept of the magazine. 1 guy does the writing and the other designs and executes our website. I am Editor-In chief and also heads as creative & Social Media Director. So far, I have coordinated and styled all the photo shoots, handled our Public Relations with my contacts and maintained our twitter and facebook. I also put together trend reports and come up with the overall content in the magazine.
I have always been told to figure out your equity as co-founders before there is money on the table. Now we are getting advertising offers and I need to figure out what is fair to take.
I would like to know what should I ask for. I want to take 60-70%, web designer takes 30-40% and the writer takes 10% or something.
What are your thoughts?? What is fair?
Co-Founder Incorporation Equity Income
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you should be asking your "partners", not asking here. – Tim J 12 years ago
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You are not going to like my answer, but based on your own words, I'd give you no more than 10%. Frankly, the writer is the one doing most of the work. You "manage". You maintain a Facebook page. This has very little value for a magazine compared to the content. You are the "idea" person. Well, that's not worth very much around here. – Alain Raynaud 12 years ago
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Well, we are going to talk about it tomorrow. So, I just wanted to know what you think I should be entitled for, based on what I've told you thus far. Thank you! :-) – Fashionisto 12 years ago
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On the strength of what you're saying, until you bring in investment - which you don't mention, starting point for discussion should be 33:33:33, and it to be vested based on work done over time. What you're suggesting is you get total control - your "partners" might not be too happy with that. And reasonably so. Personally I'd be walking away from such an "offer". – Matt 12 years ago
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I can't conceive of how you could possibly justify getting more than the other "partners". I agree with Alain - your tasks are hardly worth compensation on the order you expect/desire. I don't think you will find anyone worth working with that will agree to your terms. – Tim J 12 years ago
1 Answer
First, if you take 60-70% and the web designer takes 30-40% then there's nothing left for the writer.
Second, equity should be split not based on what you've done prior to launch but how much you'll be doing after the launch. Writers make or break media outlets because they create the product. Is 10% of the business really a fair price for the writer's work?
Third, if you own more than 50% of the business you call all the shots. Are others content with such a distribution of power?
Fourth, the money that you'll get from advertisers goes into your company's bank account first. Then it is used to cover all operational expenses including but not limited to bills, salaries, and taxes. And if there's any profit left, you may issue some dividends to yourself based on the shares owned. Salaries need to be agreed and signed into contracts.
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Thank you! Just to let you know, I will be writing as well. As Editor-in-chief, if I were to take 60% of the share, how do you think the money should be split between the two? Also, you mentioned salaries. Do you have an idea of how I can figure that out or a ballpark of what it should be? I'm editor in chief, the writer is managing editor and the other is Graphic production director. Thank You. – Fashionisto 12 years ago
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As I've said, amount of work matters the most in startups so forget about titles when resolving administrative issues. I think you should split your shares at 40/30/30 or 45/35/30 but in no case 1 person should have the controlling stake. Salaries should be the bare minimum (possibly even equal) at the start. – Dnbrv 12 years ago
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sorry this is his friend and business adviser and to Alain i dont know how you can even say that you would not give him more than 10% and how the writer does most of the work what line of business do you deal with because in no way shape or form does the writer do more of the work the writer merely just writes articles about the subjects pictures and or videos that was put together by the editor in chief not to mention the amount of stress that it takes to manage put together n complete the tasks and shoots also he is the majority creator of the magazine so in any line of business that would – Fashionisto 12 years ago
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entitle him to a majority percentage of shares in the company thats business 101 and before anyone wonders if im his business advisor why did he post on here instead of consulting me its cause i was not available but now i am and its a good thing cause judging by the answers you people gave him its obvious you people do not know what you are talking about and most likely dont have thriving businesses – Fashionisto 12 years ago
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Dear anonymous business advisor, let's start with fixing your grammar and punctuation and then we might talk about your professional qualifications (they aren't far off from your command of English). – Dnbrv 12 years ago
