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First Earn It: 5 Tips for Building A Successful Sweat Equity Team

July 24, 2012

Featured, Startups

Avacado Tree and Fruit

Thanks to emdot on flickr

A fledgling company has a lot of dreams, but often little cash. During the early stages your business should focus on product and customers. This includes financial focus as well as development focus. But how do you attract an all-star team that will be highly motivated to create a top-tier product on a shoestring budget? Give them a piece of the action.

While a startup may not be worth much today, a successful company can be worth a great deal tomorrow. Give your team members a chance to cash out big in the future.

1) Get the Right Team – Look for independent people who love to experiment and are motivated by the big dream. The people who can see your vision, love to get behind a big project and will work with a team to make it successful are the kind of team members you want working with you.

2) Work the Room – Talk with a lot of potential team members before you choose a team. Meet for coffee (cheaper than lunch), videoconference or by email and be prepared to pitch to a good candidate at a moment’s notice. Trading stock for work puts you in a long-term relationship with that team member, so be sure he or she has the right temperament and skill set to stay with the team for the long haul.

3) Pick Missionaries Not Mercenaries – Everyone will need to share a common vision coupled with a passion to see it succeed for the team to make it. Talk with purpose to candidates and make sure they are in it for the right reasons. Only this will push them through the hard workload every startup faces.

4) Make the Right Offer – Be clear about what you are giving and also what you expect to get. An offer with little or no cash can seem like all risk and no reward to candidates. Adding in some “soft” benefits such as agreement on an advancement path if the company takes off, employee gameroom or favorite snacks in the breakroom can make a financial spartan offer a little sweeter. Also, keeping the team member a contractor rather than an employee can reduce headaches for you and the candidate. Check with your tax professional to make sure you take the right steps to keep the member classified as an independent contractor. Finally, set milestones and a final deliverable for your team member so the company gets what it bargained for. Clearly defined requirements and timelines help keep any project on track.

5) Write Now, Right Now – Get your paperwork in order before bringing a new team member on board. You need to get a scope of services, stock options agreement for the contractor, stock plan and nondisclosure agreement covering the intellectual property. Being clear now about expectations, transfers, timelines and responsibilities can save enormous heartache down the road.

Now get to work!

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