New Web Based Business Needs Advice

[Geoff Baker]

Hi,

I’ve just started a new web based project but I need to know the best route to find a web developer (experienced with Joomla) to work for sweat equity (they do some work and I give them a % of the Business). I already have one web developer and a charted accountant involved in the project who are working on the same basis. The chartered accountant normally charges over £100 per hour, but having gone through the business model, he believes we will be very profitable and is therefore working for small % of the business/profits.

Where can I find a hard working and skilled web developer who would like to own part of a business but does not want to invest hard cash. A developer who perhaps has thought about setting up a business but has been put off by the financial climate or by the thought of risking money they can’t afford to lose? Maybe like the accountant, who has his own small practice, a freelancer who could see this as a way to increase their revenue without impeding on their current work?

I know there must be developers who would invest some time to be part of their own business rather than making their bosses rich! So how can I find them?

Answers on a post card!!!

Seriously though can anyone point me in the right direction, or maybe you know someone looking to take a small risk in time for the potential of a large return in cash?

Geoff Baker

 

[Deleted member 27344]

You pay peanuts, you get a monkey.

We get these offers every day (and turn them down for obvious reasons).
If you're really serious about your business you'll have a proper budget.

 

[Geoff Baker]

mmmm Interesting!

In terms of your comment about finance. I have owned and ran numerous businesses over the last 10 years and have always found that partners work harder than staff. I also believe that a person prepared to invest (whether time or money) has a stronger belief in the product and their ability. Finally I would also say, having partners in a business drives me to work harder through obligation.

Thank you for your comments PointandStare,

Geoff Baker

 

[Deleted member 27344]

Geoff, I totally agree about shareholders working harder - no disputing that.

I wish you luck, I really do but feel you'll not get anyone decent enough to do a good job.

 

[ozbon]

From my own experience, and having been bitten by the "share equity" thing before, I still feel that it can be summed up thus

"Regardless of how good an idea it is, a 50% share of nothing is still nothing"

In other words, you're asking people to do work for you on the assumption that a) the plan's a good one and b) that it'll make a profit. Also, is the share value based on turnover (i.e. for every £100 you take in, you divvy it out immediately between the partners) or only on profits? (so you only divvy it out once the basics are all covered etc.)

I'd rather work for at least reduced fee + share bits - that way at least you'e got something for your work, rather than relying on it coming together at some future point.

 

[FireFleur]

I think it depends on the complete deal.

If you are offering just shares, then you have to keep valuing the company and demonstrate the value of the shares.

So, if you buy stock at 10K with no creditors, then the shares are worth 100 a percent.

If someone does 20K of value work then the company value goes up by 20K to 30K, so 300 a percent.

The idea is worth 0. A business plan of the idea is worth something, and the implementation of the idea is worth even more.

What concerns me is you have chosen technology already that is worrying, why joomla?

Share value is on value of the business, so on gross profit acquired (or lost ) over time, plus initial capital, so that is the holdings of the company. You are only entitled to money via dividend or sale of the shares (if you can find a buyer).

I quite like these type of deals, but the figures have to be right.

 

[Sunlust]

I think that people who have enough skills to get a fully working, good looking and interesting, money making website up are already employed.

People who would go for a deal for nothing are either newbies or people without talent.

Btw, I lol'd at the "you pay peanuts you get monkeys".

 

[YODspica]

nice read here, 10 Ways to Cut Down Web Development Time http://TwitPWR.com/h2M/

 

[DuaneJackson]

Most develoeprs have been burnt by sweat equity in the past I think. Your track record and the fact you have others doing the same may help persuade someone.

A genuine question though - you've been in business for 10 years so I assume you have some capital.

Why give a developer x% equity (which you and he will have to assume is going to be worth more than he'd charge in a usual setup) - why not give him the cash and keep the equity?

I can sort of understand why someone with zero capital would need to go that route - but even then if you genuinely beleive in what you're doing then you raise the money somehow to keep the equity

 

[Geoff Baker]

Wow! I can’t believe the amount of comments and private messages I am receiving. Thank you for your time and your thoughts.

Pointand Stare;

Thank you for your best wishes and I am hoping that there are a few people who are good enough to achieve the results I need. I would only look to invite the right person on board and am therefore passing the details of those people who have PM me with an interest to my main web development person who can analyse competency. I do have a fantastic person who can do the entire job and has already developed a highly credible site. He simply has had a massive increase on his other commitments causing him to fall slightly behind some of the key amendments/additions to the existing site.
I appreciate your comments though and thank you for a positive post

Ozbon;

Firstly you totally correct that 50% of nothing is nothing, in fact its less than nothing if you have invested time and/or money.
I would argue your next point that I am asking anybody to do any work with any assumptions. I am initially highlighting my position, I will then check respondents suitability and finally once I think a person can do the job, I will then discuss the business model with the prospective partner. If they then believe that they will see a return on (time) investment, they can make an informed decision as to whether they want to get involved.
I would not expect someone to blindly do work for me without some level of due diligence on both sides.

FireFluer;

I think my previous point agrees entirely with what you say... It depends on the complete deal.
Only if the deal works for all parties could it go ahead.

Sunlust;

Like you, I would expect that the kind of person I am looking for will be employed in a well payed position, or is a freelancer who has a lot of work to do. Like the old adage says – if you want something doing, ask a busy man. Like the existing web developer, who has a very good IT job, he ultimately wants more than to be working for someone else. He is not a business man, he is a techie. This is simply an opportunity for someone with a high skill level to get involved with something which could allow them a freedom to do what they love to do, but also to be generating wealth for themselves rather than for their boss/company.

YODspica;

Thank you. As a not techie person its all foreign to me, however I have forwarded a link to my existing developer.

DuaneJackson;

Thank you for your points, however I feel I answered them at the beginning of the thread;
“In terms of your comment about finance. I have owned and ran numerous businesses over the last 10 years and have always found that partners work harder than staff. I also believe that a person prepared to invest (whether time or money) has a stronger belief in the product and their ability. Finally I would also say, having partners in a business drives me to work harder through obligation.”

Thank you all for your comments, and having seen how some people have been torn apart on this site, I take it as a compliment that although some of the point made have been less positive than others, nobody has lowered the tone of the thread to an attempted assignation.

Geoff Baker

 

[wood1e2]

Having just quickly read you posting...why is your main developer not interested in taking a percentage? What is stopping him developing and why are you only interested in Joomla?

 

[wood1e2]

The other thought I have just had, is you would have to dish out the equity on a fair bases, so if the accountant is getting £100 per hour then the developer would have to get the same as well.

Being that all work for equity would be equal.

The other thought is what exactly is a Chartered Accountant needed for when a company is turning over less than £5million?

Obviously outside of Personal/Company taxation expertise?

 

[Geoff Baker]

Hi Woodie

Taking your points in order, Firstly the main developer has taken equity. The allocation of equity for web design will not increase as the amount of work has not increased. Any equity given to a second developer will come from the main developers share as the two people would simply be sharing the work.

The reason I am interested in Joomla is because the site is online and operational. There is no reason at all to change this, otherwise we would need a complete redesign and this is unnecessary.

In terms of dishing out equity – Im not dishing anything out. The allocations are calculated on a basis of what the work involved would cost and therefore work for equity is equal. This is why the second web developer would receive equity from the first developer as the amount of work would be shared.

With respect to the accountant. He is my accountant and has represented me for numerous years. Many of his clients turnover less than £5m. Him being chartered simply means he is qualified to the higest level, not that doent deal with SME’s.

 

[wood1e2]

Thats fair enough...

Sorry for the use of the term dishing out, perhaps I should have used the term allocate.

So who would decide the share to be allocated to the second developer?

being that one's hourly rate may be higher than the others? And therefore the primary developer could loose all his/her allocation?

 

[keithzala]

i cant afford sharing but can give you best price like outsource work with local contact and contract.

Thanks

 

[Geoff Baker]

Thank you keithzala, but as per the point I have made on more than one occasion in this thread, I want someone with a vested interest in the project rather than a contractor/employee.