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Thread: Sweat capital

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    just me duncan drennan's Avatar
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    Sweat capital

    If someone came to you with an idea or a concept and pretty much wanted you to put in sweat capital, what would you want from them?
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    Site Caretaker Dave A's Avatar
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    A bit cryptic, Duncan.

    What are the financial capital requirements?

    By sweat capital are you referring to salary sacrifice?

    Are they looking for a share based on introduction of concept and no further contribution?

    Let's leave it at that for now in case I start really barking up the wrong tree.
    The trouble with opportunity is it normally comes dressed up as work.

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    just me duncan drennan's Avatar
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    Quote Originally Posted by Dave A View Post
    A bit cryptic, Duncan.
    Didn't want to go into too much detail, just wanted to leave it open ended. When I say sweat capital I mean putting in the hours to develop the product/service/etc. The other person (in general) could bring things like capital, connections, a market, etc. to the table.

    But again, to keep it open, what do you all feel the other person(s) should be bringing to the table?

    I know I'm being vague with this, but I really want to keep the answers open-ended. Picture a situation where you have skills and someone else wants to make use of those (for free) to develop a product/service/etc. — what would you expect from them? What should they be proposing? What should level of clarity should be on the table? etc. etc.
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    Site Caretaker Dave A's Avatar
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    In a classic capitalist model, you need to identify everything that will make the business viable.
    Non-financial contributions need to be converted to financial equivalents.
    Then you need to be clear about who is bringing what to the pot.

    Finally, and this is particularly valid if there is a lot of non-financial contribution in the beginning, there needs to be a clear understanding of what happens if the project gets stuck at any stage.

    Relating to a possible scenario knowing something of your background:
    Someone brings concept.
    Someone else engineers the concept.
    We reach a stage where hard cash is needed and it is not forthcoming.
    What then?

    To pop out some thought prompters - clarity, commitment and parachutes.
    The trouble with opportunity is it normally comes dressed up as work.

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    Based on the present sketchy details of your question, this question could be as difficult to answer as in: What do you think your business might be worth?

    Apologies in advance if I sound negative! School of hard knocks experience does that to a person.

    I have been on "both sides" of my understanding of your question.

    Neither party will ever view the situation from the same perspective.

    The answer is: the value you put on Risk, Effort,Time, Financial Contribution - balanced with potential reward - naturally - and I know you already know that answer.

    Basically the more the prospect needs you, or your skills:
    The more delay in financial reward:
    The more you personally risk in any aspect of the business:
    The higher you have to believe the potential reward will ultimately be, and the more you should negotiate for.

    The necessitity to ensure that you have built in conditions protecting your own long term interests is vital!
    Frequently when you contribute something essential for the start up of "their" business, the promises flow.
    Once up and running (if successful), the originating person starts convincing themselves they could have done it on their own, then financial issues cause the relationship to sour, seen it happen to friends and acquaintances - time and time again!

    Income sacrifice at start up? if the originator is "Drawing" their normal salary -re-think. (Even this statement depends entirely on the circumstances.)

    Potential can be a "two edged sword". Just because something has potential -this does not guarantee financial success.
    Like a flash of lightning, massive potential power, but not possible to harness!

    From your posts I would think the possibility exists that if it was something that would challenge and excite you - you may try it for no financial reward at all, just for the sheer satisfaction!

    It is "ALL IN THE DETAILS"

    Yvonne

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    just me duncan drennan's Avatar
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    Quote Originally Posted by Yvonne Symons View Post
    From your posts I would think the possibility exists that if it was something that would challenge and excite you - you may try it for no financial reward at all, just for the sheer satisfaction!
    Very insightful into my character...and true! For me some of the rewards which I would work for are, exposure for my company, doing something that positively impacts on the world around me, and networking.

    Quote Originally Posted by Yvonne Symons View Post
    It is "ALL IN THE DETAILS"
    Yes, and this is where I find myself getting a bit stuck — the details are vague (and that is probably being kind).
    Last edited by duncan drennan; 19-Apr-07 at 08:20 AM. Reason: eish...written too late at night, wasn't making too much sense
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