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Consultant Compensation Agreements

mbsrfnusambsrfnusa subscriber Posts: 1
edited April 2008 in Business Planning
I have a great baby boomer product to manufacture and market.  There are actually two products.  I will farm out all the manufacturing and marketing.  I have a Mechanical Engineer who will finish up my design work for prototype development and will also be my Manufacturing Consultant.  I have a Marketing Consultant, a Financial Consultant/CFO, and a Business Manager. They all love the product(s) as does everyone personally I know who know about them.  They also know I do not have the means to finance this.  They have all signed NDA`s.  Now I am pondering how to fairly, and I would like to be more then fair in, compensating them.  I am now preparing my Compensation Agreement.  I`m not sure about equity sharing, offering shares, and/or paying street rates for time and/or service plus some type of great bonus package.  I know the Finance Consultant should or will know how to deal with this but, I would like to be able to show that I have at least a basic idea, and that I would know what topic items I should be prepared to explore with them.  I appreciate any guidance you can share with me. 
My Boat Is Finally Coming In....I need to make sure I have my dock properly built for it to arrive at...so that we can next start on the business plan and marketing plan. 
Thank you very much
M.B. in S.F.
mbsrfnusa4/21/2008 12:36 AM


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    stonesledgestonesledge subscriber Posts: 608 Silver Level Member
    Form too
    stonesledge4/23/2008 3:48 PM
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    stonesledgestonesledge subscriber Posts: 608 Silver Level Member
    It was cut off a bit..I can email you, if need be, just let me know
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    ChrisBenjaminChrisBenjamin subscriber Posts: 13
    It`s all negotiable, and depends on what you and they feel comfortable with.  I`ve entered into all kinds of agreements with my clients as a part time CFO.  Some I have a minimal cash payment with heavy stock, another is all cash now, no stock... and a few inbetween.  Depends on how much I believe in them and their ability to really take off, and their taste for giving up part of the company. 
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    robertjrobertj subscriber Posts: 0 Member
    M.B in S.F.
    I am not a big fan of using equity to purchase services. If one is going to "sell" equity, I find it much better to get investors then use the cash to pay for services. Some points to ponder about using equity to buy services:

    Generally you will over pay for the services
    You are pretty much married to the service provider.
    They become your business partner.
    Their advice and guidance may be influenced by their personal interest in the business
    Since we all need cash flow to exist, you will likely be pushed into some liquidity event - earlier than later.
    Choices of providers may be limited.
    Some types of services may not be available via the equity route -
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    DougsterDougster subscriber Posts: 4
    Good advice Robert & good luck/skill MB.
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