Be careful talking in terms of % ownership!
Many people seem to get hung up on what percentage of the company they own at any given time.
If you need to sell more shares to raise capital or hire a new person, everyone’s ownership piece of the pie is going to change.
It’s crazy-making to be constantly looking over your shoulder and worrying about what your people think is their percentage of ownership in your company.
“I did something so I deserve more of the company!”
Some may think it’s unfair. Count on them being disappointed in some way.
Constantly recalculating and discussing your percentage of ownership is a psychological nightmare especially for management trying to maintain people’s desire to work.
You can buy complex software to keep track of these changes as people come and go (or use the simple worksheet here), as well as when investments are made, but be careful talking in terms of % ownership.
Start ups are hard enough to fund, build, and manage!
It’s OK to talk percentage at the initial stock allocation (including vesting schedule), but since the % of company ownership will change constantly, it’s the wrong thing to focus on — going forward, it’s best to speak only in terms of number of shares.
The idea is that each person has their shares and everyone gets rich the same way ⇒ share price!
Otherwise, you spend too much time managing expectations and refereeing who owns how much.
You just don’t need your team in a tizzy-fit, distracted from doing what they can to increase the value of their shares.
Do you really want to go through that every time something changes?
Your focus immediately after getting options or shares should be simply on the number of shares you have and the value per share.
What you can be doing to increase the value of the company?!? Versus being in a constant state of flux thinking about how much the percentage of the company you have.
Save cash and pay contractors and others with stock options.
Software app & templates documents ownership shares and manages stock options for advisors and contractors
Stock Options Builder is a collection of fully scripted sample documents written in Microsoft® Word that you can easily customize. It also includes a comprehensive Excel® excel-based stock and options issuance register — just fill in the variables and print. Stock Options Builder is perfect complement to BizPlanBuilder when raising capital.
Have your ownership, vesting and other terms of working together clearly documented ASAP!
“More often than not, sound legal documents can be purchased over the internet to cover better than 99% of most company’s needs. I have found Stock Option Builder to be a good example. As to implementation directions, the plan clearly states all relevant responsibilities, obligations and processes — it’s all here. 5 of 5 Stars!”
~ Dennis Thomas, Knowledge Foundations, Westminster, CA
You need to know what’s in these docs and how they work, so you may as will do this yourself — With a qualified attorney on-call!
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It’s the fastest and easiest way of turning your ideas into an investment-grade business funding plan and a successful business. BizPlanBuilder also supplements the “business model canvas” and “lean start-up” ideas to provide investors with the details that make them comfortable and inspired to write checks. You’ll see why when you learn more.
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