How Do I Know if I am Making a Fair Deal?
At PartnerHere you are going to meet some very creative and driven people. They will be making offers to you that will be very “outside the box.” That is the magic of PartnerHere, but it can also be a bit scary. How do you know if you are being treated fairly? The inverse is also true. How do you know you are treating others fairly in the offers you are making…and what happens when you both check the “Let’s Get Creative” box and ideas of how you could work together start running amok!
Here are some rules of thumb and some stories to help guide your thinking:
- Does it FEEL fair? Use your gut. Trust your gut. If it feels like you are getting what you need and they are willing to give you what you want for what you are willing to give, it’s probably a pretty good deal. Remember that great deals are where BOTH SIDES feel like they got the better end of the deal. Good deals are where both sides feel like they got a fair deal. If one side feels like they won and the other side feels like they lost or were taken advantage of for some reason, it is NOT a good deal. That is important because lopsided deals fall apart over time. Good deals are stable over time.
- Your reputation on this site and in life will matter. You will quickly become known on PartnerHere. As a social site, reputations will be built quickly and a great reputation as a fair and generous player will lead to many more relationships and many more deals. A poor reputation will severely limit your ability to make deals. If you are unsure about your deal, try to find a way to sweeten it for your partner. They will appreciate you and remember.
- If a deal does not feel right, take a PASS! Never make a deal because you feel social pressure or business pressure to do so. This is the land of awesome deals. If it doesn’t feel right, pass. Another one will come along.
- Start with Cash. We don’t use much cash around here, but sometimes it makes sense to first imagine what a cash deal would look like. Then translate the cash into project hours or percentage ownership or barter or whatever other alternative compensation you are using. Sometimes using combinations of different types of compensation is a really good idea, too.
- What will it enable you to do? That could be anything from paying your rent to taking your business to the next level. Think about what this deal enables in your life. A friend recently called me and asked about compensation that was proposed for a deal. She wasn’t getting much cash, but she was being promised referrals and steady work in a new city. I felt like she should pass and then she said “Yeah, that’s kind of how I feel except I really want access to the video studio.” “Wait”, I said, “You also get access to a video studio?” “Yes”, she said. “And an editor.” “Well, that’s HUGE” I said. “That allows you to build your business all day long when you are not cranking out contract work.” That was a deal changer and I suggested she take the deal. She was getting a platform on which she could build her own dream business. Is she taking a hit on the cash? Yes. Does she have an opportunity to make it rain? Yes. Anytime a deal enables you to take your business to the next level, you should consider that value.
- Who do you get to play with? You are the sum of the five people you hang around with most. Will this offer enable you to work with some really smart and talented people? If so, what could that be worth to you over time? The right relationships are priceless. I believe that about 80% of my lifetime income has traced back to just about 7 people. What if I had never met them or worked with them. In each case, I did some serious dues paying, but it was far more than worth it in the long run. Play with smart, creative and talented people who have a proven track record of success. You’ll be amazed at what happens. It’s always magic.
- Ask Others. We’ve got lots of folks on PartnerHere that are willing to help you figure things out. We are a community of entrepreneurs. Message someone else and ask their opinion about a deal or an offer. If you ask three people and they all say yes or no, you’ll have a pretty good idea. If it’s a mixed bag, I’d go back to trusting your gut. If you are still unsure, just say no or keep changing the deal until it feels right to you.
- Do You Need Reference Accounts? If you are new to the business and you need clients or reference accounts, maybe you have to suck it up and pay your dues to get started. There is no shame in building your resume so you can charge more later.
- Do you want the experience? You may want to work in an area you have never worked in before. You may have to take a few gigs that give you less than you want to get credentials in a new field.
- You NEED what they have. I had a very rough time finding programmers who wanted to take equity in PartnerHere because they are all making bank working for cash. If you really, really need what they have to get started, sometimes you have to pay more or barter more or give more equity to get what you need to get started. If you can’t get it elsewhere for less, maybe it’s worth more than you think. Get the deal done and get moving. You aren’t making any money watching Netflix!
- Make a short-term deal and then a longer-term deal. If you are really scared, just take baby steps. Do a deal for step one. If it goes well, do step two. If it doesn’t, stop. You can take it slowly just like any relationship. Once you get to work together, you’ll figure out if there is a match or not.
- Have an Expectations Conversation and Put It In Writing. Most relationship upsets come from unmet expectations. Putting both sides expectations in writing and agreeing to them minimizes upsets. When something comes up that you both didn’t anticipate, sit down and talk it through. Amend your written expectations.
- Hire a Consultant. The right consultant can be worth their weight in gold. If you can find the right consultant who can make the deal come together in a way that everyone wins, they will easily pay for themselves.
- Ask for References. If you don’t know the person, ask for references who have done business with them in a similar way. Call the references. Don’t text 3 words. Have a CONVERSATION about the person. By the time you’ve checked 3 references, you should have a feel. If their references feel slimy or are avoiding directly answering your questions…take a hard pass.
- Ask an Attorney. For anything that you consider material or important or risky or “big money,” get an attorney to draft a quick contract. That way, you both know what the terms of the deal are. Business owners often tell me that attorneys are expensive. It’s been my experience that they can save you far more than their fees by anticipating the downside and protecting you against it.
- Trust Your Gut. NEVER do anything that feels wrong. If you can’t sleep at night, it’s not worth it. A good deal won’t stress you out or scare you. It should make you excited to get started. If you are not excited, pass.
Consider this. If you are so cautious that you never make a deal, you’ll never start or grow your business! I’m working with a company right now that is so risk adverse that they almost went out of business. The new CEO and I are introducing reasonable risks back into the business and the business is growing again. Risk is part of business.
My definition of a fair deal is one that moves my objectives forward that I can live with and sleep at night. Often, the other party gets the better end of the deal. That’s OK with me. I’m getting what I need to take my business to the next level and I’m building my reputation for fairness and generosity. If I keep doing that, I’ll get where I am going soon enough…and so will you.
I look at my deals as a portfolio. Each deal may be great, good, bad or terrible, but if overall I am making significant progress, why would I focus on the bad ones. I just focus on doing more with the right people who are making good or great deals with me and stay focused on the future. Our brains are wired to be cautious and to perseverate on losses and bad relationships. Understand that our brains were wired for a world full of sabre toothed tigers, poison plants, contaminated water and venomous snakes. There aren’t many of those around now, so we need to learn to back off the DEFCON 1 response to danger. The Chinese character for crisis means opportunity on a dangerous wind. Business is like that. There is always risk, but overcoming the risk is where the huge rewards lie. Don’t be afraid to take risks and lose. With each risk and loss comes wisdom and from wisdom comes wealth. Get out of your comfort zone and start learning. Figure out what your business needs most right now and make a deal to get it. Then do it again and again. Wealth and wisdom will soon be yours.