The whole schtick about being an entrepreneur is that you’re going against the grain, you’re a rebel with a sharp mind, looking to take out the competition. You’re going to make it on your own, somehow, somehow! So why don’t we ever talk about business independence? Why is it that in recent years, so many small business owners and entrepreneurs have been so ready to sell their business to a larger company? They think they’ll be fine, even if they just own 49% of the company. Wrong, they will always be slowly but surely moved out of the way by the new CEO. A director role is not the same as the role that makes the final decisions. If you’re a struggling entrepreneur and you want to stay independent, this is what you need to do.
No one said you should go it alone totally. You will need some kind of financial backing. But the trick is to outsmart those seeking to invest in you. Normally, investors will want to own the majority share of your business. They do this because they want some kind of insurance for their money and that usually means, sacrificing your business as collateral if it doesn’t work out. Here’s how you can retain the majority ownership of your business when dealing with investors.
- Give them the lion’s share of the profits. Sometimes it really is a game of balances. You can agree to give them a larger portion of the profits, which doesn’t leave much for you in the beginning. Most of your slide of profits will be invested back into the business, such as R&D. But you will retain control, which is the overall goal.
- A phased ownership plan. You can temporarily give majority control of your business for the first couple or few years. If an investor is willing to give you $200,000 over the course of 3 years. Give them a larger cut of the profits and give them 52% of the company in year 1, then 50% in year 2 and finally, 48% in year 3. This means you get the money but you also retain control in the long run.
Sharing is not caring
Growing at your own pace is vital when you’re an entrepreneur. Not only does this mean you can expand at your own rate but you’re not going too far too fast, when you don’t want to. A prime example of the former is ditching a shared server for a cheap vps package. The Basic plan gives you 4GB of RAM, 50GB of SSD space, and 2 CPU cores all to yourself. Now you can increase the number of your applications, increase your visitors, and add more products to your line.
Coworking spaces are often limited in a number of ways. This FAD seems to have run its course, and private offices are back in style. Having your own office will also allow you to have full control over your work schedule, tasks, software, and moreover, your employees. Remaining as independent as you possibly can be as an entrepreneur is what will allow you to remain creative and motivated. Handling investors is tricky but you can negotiate to retain majority control if you wish.