As stated in my first post in this series:
“It is a very difficult task to determine someone’s worth, merit, importance, or usefulness, as it relates to you and your business. Value is a very relative and subjective concept. What I may consider a valuable product or service, you may see as something of little use.”
How should business owners and entrepreneurs, living in a mode of scarcity (i.e. “not enough”), compensate the advisors they so greatly need? While there are many different tactics that one could employ to pay someone, there are really only four (4) categories:
- Cash – a payment of money
- Equity – ownership in the company
- “Free Access” – to use the service or product being created
- A combination of the three
The payment of money is always best, for both the business owner-entrepreneur and the advisor. It is likely, that if you find an advisor who is truly adding value to your organization now – and you expect him/her to add value into the future – you are going to have to pay them a fee for their time and expertise now, as well as in the future.
If you can pay the advisor’s fee and set a specific period of time for the contract to be completed, or a specified amount of time each month, you are in control of your expenses and maintain full ownership of your company.
Unless it is the advisor’s clearly stated objective to be a long-term partner.
There are a few advisors who are looking to become long-term partners with business owners. The author of this blog is one of those few.
Business owners need a plan. There are a lot of plans developed by a lot of different advisors. The reality is that most business owners don’t implement the plans. (The reason why is beyond the scope of this post). Business owners don’t only need a plan; it’s a given that everyone business owner needs a plan. But what’s missing most of the time is that the business owner needs someone to advise them and also help them implement the plan.
Sure, the development of a plan is expensive. But, the implementation of that plan is even more expensive.There is an opportunity cost to every choice. Do you want to pay someone to help you implement or do you want to partner with someone? They’re both expensive, but you’re going to have to choose one. However, if the advisor is really good, you might have to pay with both.
“If you think education is expensive, try ignorance.” – Derek Bok