Ever thought you were underutilized at your job and saw a new business opportunity? When Kyla O´Connell found her marketing budget reduced, she realized it was the perfect time to create her own marketing consultancy. She pitched her boss on becoming her first client asked him to "partner with me to start my own business at 50% of what he was paying me full time.” This worked out and kick-started Kyla´s firm, Driven Sales and Marketing, that offers complete marketing solutions for small to medium sized businesses ranging from $2M – $25M in sales.
In an earlier blog about consultant agreements, I mention the delicate balance between up front cash, and back-end commissions, bonuses or equity. Kyla has benefited from her back-end revenue sharing deals. "If a client needed sales help, and the project lended itself to my background, I agreed to some back-end form of compensation." Currently, she has a client agreement where her client sells a product over the Internet, Kyla is responsible for the sales support, and she collects 20% of her sales at the end of each month. She´s graduated a simple vendor relationship to a revenue-sharing partnership.
In addition to revenue sharing, Kyla takes advantage of trades for services she requires. While this isn´t a formal partnership, in her mind, it is just as necessary for her business. On a recent projects, one of her sub-contractor designer needed input on a marketing strategy for one of his projects. Kyla offered free strategic input and he designed my logo and website.
Tips for making the jump from employee to business owner
Tips for revenue sharing partnerships with clients
1. Does your service offering lend itself to revenue sharing-in other words, are you directly responsible for revenue
2. If yes, can this be measured and tracked
3. Take a percentage of the revenue that is meaningful to both parties (no too much where the client gives up their profit margin, but a bit more than it would cost to provide the service in-house)