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Should I become a partner or a subcontractor in a new business venture?

I am starting a new business venture with a friend. He already has an established business in advertising and is doing OK. He would like me to start a new division of his company teaching computer-based instructional lessons. I will do all of the work, including researching and structuring all the classes, teaching them and even advertising for clients. Should I become a partner in this subdivision of the business, or a subcontractor? If I build this from the ground up and it really takes off, I want to make sure I benefit from our success. How should I structure this deal so that I get the most out of the venture, make it appealing to my new partner and protect myself?
Brad Sugars answered October 30, 2008
Should I become a partner or a subcontractor in a new business venture? In reality, this isn't an either/or question. You could always start out as a subcontractor with an option to become a partner or get shares of the business based on growth and delivery of certain targets.

You could also work out a deal where you would pay commissions back to the established business based on the numbers of leads and customers the established division routes to your division. Essentially, all of this is open to negotiation, and the first rule of negotiation is that there are no rules. It is simply finding a solution that will work best for both of you--so you can both share in the success of the new venture.

All the best.
Brad Sugars

Brad Sugars is the founder and chairman of ActionCOACH. As an entrepreneur, author and business coach, he has owned and operated more than two dozen companies including his main company, ActionCOACH, which has more than 1,000 offices in 34 countries.