Hi, I am in the process of starting a new business and I have someone that i would like to hire as my vp of operation. This person has 30 yrs. of business, marketing and managing experience. Unfortunately i do not have a lot of start up capitol. So for a short amount of time he will take a reduced salary about $250 per week for the next 6 month. He will basically be building this business from the ground up over the next year but for all of the he wants %40 of the company. I the first year the company should net about twenty thousand dollars. I bring to the table the idea, money, and beneficial connections. He brings 30 yrs business experience. Is this a fair percentage? If not what is?

You could think about it this way. How much is your business worth? What is the VPs contribution and what is that worth in terms of equity? Deduct from that his salary... and that will give you the equity he should get.

Anna Johnson
How To Manage People (Even If You're A Control Freak)
http://www.howtomanagepeople.com

make a counter offer? Say 50% but no salary. Or acctually 49%.

I think if he is really good (which I have my doubts because he is willing to work for $250 a week. I have not got his amount of experience and I have a marketing job that is $500 a week and 4%). But if he is he would be worth it to you.

Also, if his experience is all in marketing wouldnt it be better to put him in as vp of sales and marketing. He would be wasted in operations.

good luck

Johon,

I have to respectfully disagree with Richard a bit. I think it's a reasonable deal. While Richard questions his competency because he's willing to take $250/wk...I've requested nearly the same deal myself in startups or turnarounds, and I consider myself as reasonably competent, and my reasons for it are this.

Early in my career I found people in closed corporations wouldn't listen to me unless I was charging a lot, (usually what I considered overcharging). When I began doing turnarounds especially, there was always the need to conserve cash. So, I started looking at the backend deals...I was paid something for my time...but the payment for my experience, ability and knowlege came at the backend from the fruits of my efforts.

In my case I didn't want to stay with the companies beyond what I was needed, so rather than take a piece of the company, I structured mine for a piece of the profits for a fixed period. It served me well, and it served my clients well.

I suspect given that he's got 30yrs behind him he has enough put away that he doesn't need a high salary to live on, but has enough time left, and interest in the business that he want's to remain a part of it and wants to help preserve its cash in the startup period. Given that he's asking for what I consider to be a reasonable percentage, I think the guy is credible. If I had to offer this deal, I'd feel comfortable with it, and if I had to accept it, I'd feel comfortable with it...and that's usually the sign of an everybody wins.

I do agree with Richard in that you should sit down and figure out how he can best be used. If all his experience is in sales and marketing...operations would probably be wasting him, especially if he doesn't have any overall management experience. I suspect that with 30 yrs experience, he's probably going to have a better idea of his fit than you are...you'll just have to keep your ego in check and not fight him on something that he may be better at than you, when you feel it's infringing on your responsibilities.
I hope this helps...
Denny