compensation for biz connections (supply)

Discussion in 'Off Topic Discussion' started by honestbiz, Apr 19, 2010.

  1. honestbiz

    honestbiz
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    Recently I presented a business proposal for starting a new sales based company to an investor, and he was interested in the idea. He decided to do some research on the idea of Marketing a sustainable product line. He then asked me to prove my connections for supply. I introduced him to my supplier by skype, and we had a meeting of introduction through conference call. My supplier said he would be able to fulfill the required amount, and offered terms and margins. This would be an international supply and demand business with the establishment of an exclusive brand, and many retail stores throughout. The investor then dropped the ball for months, and now has come back explaining that he has found an existing company he would like to actualize, and use my idea and supplier.(Lowest prices worldwide) I am not sure what he will offer to me as compensation for my part in bringing him into this idea, and using my supplier. My question is What is proper compensation for making this connection? Is it ethical for him to take my idea and connections? Should my supplier feel free to sell to him without my involvement?
     
  2. Azertyle

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    Given that your business is/was still and *idea* there is no form of protection you could have apart from an NDA which isnt the best thing to do when approaching a potential investor.

    Now that your idea and omg supplier too has being taken and he is offering some sort of compensation , If i where the one I will either

    1.Try and haggle my way into having a share of the company if I believe in its profitabilty
    2.Settle for a compensation.
     
  3. honestbiz

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    Thanks, I was also advised to approach my supplier for a share as well, but how much?
     
  4. seanstevens

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    If you were the supplier would you give anything away to someone who said that the idea was theirs? Probably not!

    Your only real recourse is talk to a lawyer to see if there is anything in you country/state law that means the conversation is binding in anyway. If not, then you could approach them, but they would owe you nothing, and this is most likely what you would get. It is a harsh reality of business. I would imagine that if they are moving ahead with the deal then they are already talking to legal people about getting contracts etc. drawn up so you need to move fast.
     
  5. Fergal

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    Welcome to our business forum honestbiz. Sean has given you some excellent advice that should help you in this unfortunate situation. I agree that you should seek some legal advice, but to be honest it will probably be very difficult for you to get compensation.

    Perhaps you could speak to the investor in a friendly manner. He should have some respect for you, because you introduced him to the supplier and the business concept. Perhaps there is a role for you in the new business he is investing in. Maybe you could be a partner in the business, work as an agent on their behalf or perhaps you could even secure an employment position with them. Business is business, try not to take what happened personally and don't burn your bridges with these people just yet.

    Failing all that at least try to get some feedback from the investor. Ask him why he decided to go with someone other than you. Ask if there is anything you could have done better to convince him to stick with you. If you can get some feedback, you will have at least learned something from the situation.

    Next time you speak to potential investors or introduce a supplier to a potential buyer, ask them to sign non-disclosure agreements. You also need to convince potential suppliers and investors that there is no one better placed to deliver the business than you. Focus on the positive and tell them why they should stick with you.

    Do you know if the supplier has signed an exclusive agreement with the investor's contact? If not, you may be able to find another investor and still deal with the supplier. Or maybe you can find a small market, e.g. in your local geographic area, that you can serve, without requiring a large upfront investor.

    I recently read an article about Donald Trump's children, who are VP's in his business. He taught them from a young age not to trust anyone, and told them that they were idiots if they trusted him, their own father. I don't believe in that and life would be quite sad if you didn't trust anyone, but there is a lesson there nonetheless.

    Good luck with it and I look forward to seeing more of your posts here on Business Advice Forum.
     
  6. honestbiz

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    thanks Sean,Azertyle & Fergal!


    Thanks for the input, I have spoken with my attorney, and she gave me similar advice. I did make a significant paper trail of emails during our initial contacts, and had cc.'d all of them to her as it unfolded, so I can clearly show my involvement in initiating contacts and connections. I can also show that I made research into the potential markets for the country we wished to create the business in. My supplier was very anxious and exited to open the new area, and ready to go as soon as I could capitalize. The rest was done on skype internationally, so is undocumented. I have learned a lot from this situation, and I am far from out of the picture.I have more ideas for alternative products, and may be able to introduce additional products that would fit into the same marketing structure.(this time with N/D agreement!) I also feel they could use my input,and will approach that angle as well. Thanks again for the input, I already have a meeting with the investor scheduled to discuss these parameters later in the week. We shall see what develops!
     
  7. Fergal

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    Thanks for the update honestbiz, onwards and upwards!
     

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