Should I Bring a Mentor into the Business?

By Tim Berry

Opinions expressed by Entrepreneur contributors are their own.

I'm building a startup and because I have no experience other than a great idea, I enlisted the help of a mentor. Since then, I've been working with him and paying him by the hour. Now that I'm getting ready to hire a team, the mentor offered to come on board as the CEO and wants a certain percent of the company. Until I raise enough money, he said he'd work on a part-time basis at a reduced rate. What ownership percentage is normal to offer? I really need his help, but should I find someone else to be CEO?
This is sort of like asking whether you should marry the person you're dating. That said, if you do a deal like this you better be sure this person is somebody you can live with day in and day out for a very long time.

Giving away a percent of your company is forever, and you only have 100 percent to give. What worries me is that you haven't done the deal yet and you're already wondering if you should get somebody else. That might be a bad sign. His offering to work on a part-time basis at a reduced rate, however, is a good sign. That makes it seem as though he believes in you and the business.

So, what percentage is fair? The answer goes all over the map. The idea by itself is worth nothing. It's the execution of the idea that creates value. Execution sometimes requires money and the people who put money in get the value with ownership.

Don't leave it between just you and your mentor. Find other people -- an attorney you both trust with small business experience, perhaps, or a counselor or several counselors at the local Small Business Development Center. Or perhaps somebody involved in entrepreneurship at a local community college or university can help you find a fair deal.

Whatever you do, don't make verbal agreements. Write it down and both of you should sign it before there's money coming in. And make sure you have a buy-sell agreement too: That's like a prenuptial in a marriage, laying out the terms you'll use to buy one or the other of you out when you get tired of it. That almost always happens, so plan for it early.

Related: How to Find the Right Investor for Your Business
Related: Sample Buy-Sell Agreement
Tim Berry

Entrepreneur, Business Planner and Angel Investor

Tim Berry is the chairman of Eugene, Ore.-Palo Alto Software, which produces business-planning software. He founded and wrote The Plan-As-You-Go Business Plan, published by Entrepreneur Press. Berry is also a co-founder of, a leader in a local angel-investment group and a judge of international business-plan competitions.

Editor's Pick

Related Topics

Business News

'Do You Hate Me?': High School Teacher Shares Wild Emails He Receives From Students

Jordan Baechler teaches high school students in Ontario, Canada.

Business News

He Won the $2 Billion Powerball Jackpot. Now He's Snatching Up Swanky Homes Across Los Angeles.

Thirty-one-year-old Edwin Castro took his winnings as a lump sum.

Money & Finance

Want to Become a Millionaire? Follow Warren Buffett's 4 Rules.

Too many entrepreneurs are counting too heavily on a company exit for their eventual 'win.' Do this instead.

Data & Recovery

Get a Cybersecurity and IT Bootcamp For $39.97

Help keep your digital assets safe with cybersecurity courses (reg. $754) on sale for a limited time.

Business Ideas

These Retirees Just Wanted Their Cats to Drink More Water. Now Their Remote Side Hustle Makes $80,000 a Year.

This couple wanted to make and sell something from the comfort of their home. Now they're offering up their playbook for others.

Business Ideas

55 Small Business Ideas to Start in 2023

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2023.