I want to create business to where I can market individuals that I believe in with a skill/trade with a very small amount of capital.
How should i structure this? Example: i start a marketing firm with a few people that know marketing, i give sweat equity to them while our firm makes %20 a year from each individual we are marketing. I feel like equity and percentage is a way to avoid needing large capital up front
Interesting. I have done this on a couple of occasions, maybe not this exact model but close.
One approach would be a Speakers Bureau. Another would be to structure it as a full service agency or as "full" as your colleagues' backgrounds permit. Be sure to create a vesting schedule, even sweat equity can get away from you if one is not careful (says the voice of experience).
A third option would be an equity crowdfunding startup. indiegogo has partnered with MicroVentures to offer the JOBS Act of 2012 based solution for US based companies.
I would enjoy sharing some war stories or answer any pointed questions at your convenience, let's schedule a time.
I have been helping clients grow their careers and businesses via freelance marketing efforts for more than 40 years. As a pioneer in what is now called the “freelance lifestyle” I was one of the first to generate a significant annual income from just freelancing… worked with clients around the world… and opened regional satellite offices across the US.
Your desire to help others… and to do so in a cost-effective manner… is a noble endeavor, however, just by the nature of clients, you are setting yourself up to be terribly disappointed and, possibly, royally ripped off. I base my opinion on the fact that I’ve seen this same game play out over and over… almost always working out poorly for all concerned. I also believe (again, my personal opinion based on significant past experience) that doing an across the board 20% from each client is a huge mistake. In some cases a lower % can prove quite lucrative. In other cases, 20% will not be worth getting out of bed to address. Each situation should be treated as an individual situation and priced accordingly.
As an additional note… it is totally foolish to work with any new client on a percentage only. Each client needs to have a little scratch in the game… just like a downpayment on a house. If they have put nothing down… they have nothing to lose… and you will end up paying all of the bills, while the “client” takes all he/she learned from you and goes off to strip someone else of their creative efforts. The same could prove true with so-called “sweat equity” workers… where the majority of the time that relationship does not end up well, either.
There are ways, however, to meet your core objective (good intentions) and also have everything work out better for all concerned. To address those specifics I will need to know more about you, your location, your current marketing, your client categories and staff. Feel free to reach out to me later this week.
Sounds potentially viable. You've described a way to structure the business in terms of a 20% revenue share. So it looks like you answered your own question.
The real way to test whether your model works is, of course, to try it out. That means (1) finding people whose services you'd like to promote; (2) asking them for feedback on the rev share idea; (3) attempting to market them, as you described. Put it in practice and see.
I know that some people would be curious and potentially willing to give it a shot. For instance, over the years, I have personally offered a 15% referral commission to certain colleagues who might send me a client for custom naming gigs, domain procurement, or other consulting.
That's not too different from your 20% rev share idea. So, depending on how you go about things, the idea might work.