Should I be concerned with this marketing company?

Discussion in 'Growing and Managing a Business' started by Bernie, May 17, 2013.

  1. Bernie

    Bernie
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    Hello everyone. I'm new on here and I'm hoping this forum could be a good source of information as I'm trying to help a good friend out, and hopefully keep her from being taken advantage of. I'll try to keep this as short and clear as possible.

    A little about her may help paint a better picture. She's been s student for the past 3 years she's been in this country and has never been employed here the US, and because she has no work experience, and maybe her age, she's been having a difficult time finding the type of work she enjoys. Because of this she decided to take matters into her own hands and use her designing skills to start a business.

    She designed a unique, but not necessarily original product (fashion accessory), and has had different versions (sizes, colors etc) of this product already manufactured overseas and shipped here to her. So far I'd say she's invested over $6000. Her idea was to start an online store, begin with the original product, and later add to her fashion line with new products that she designs.

    She recently went to talk to a small family owned marketing company to see about designing a website and to market her product. The mistake I think she made was showing her product without having them sign a non disclosure agreement, as well as sharing with them other information they probably didn't need to know. After a couple of meetings and a few phone calls they told her they have been looking for someone like her because they were talking about expanding their business by getting into designing and manufacturing fashion accessories, as well as home goods accessories (accent furniture)....which sounded strange because that's another passion of hers that I'm sure she talked to them about.....although she hasn't designed anything yet.

    Just the other day they offered her a job with a decent salary (more than what i expected for someone with no work experience) and told her they would take on the responsibility of marketing and selling her products, and give her a 25% equity share. But never explained how that works. I've heard of revenue share, and profit sharing but I always thought that an equity share had something to do with stocks, but they're not a public company.

    I guess my question is, does this sound right? Aren't they taking too big a piece of the pie? I'm wondering if the are only interested in the product they've seen (which really is a great product), and are just going to let her go once they make their money. Seems to me that they may be trying to take advantage of her.

    I told my friend that if she wanted to see if this company if really interested in her designing skills, or just that product she showed them, to ask them if the job offer would still be available to her if she decides to take another direction to sell her product.

    Any advice would be greatly appreciated. Thanks.
     
  2. Bernie

    Bernie
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    No one with any thoughts about this?
     
  3. Joseph.Shivell

    Joseph.Shivell
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    There are members on the forum from several different companies, and several different time zones, so I would counsel you to be patient when you ask a question. You will get an answer, hopefully within a day or two.
    Personally, I would be suspicious of a marketing company that designs websites, and then decides they want to sell the same product that a prospective client does. It sounds to me like they found someone who hasn't been in this country very long, so she will be an easy mark to take advantage of. I would sever all ties with this company as soon as possible.
    The best help you can give your friend is to find an attorney or someone who can help her get the legal protection her product needs. They can also help her determine what she needs to do to start her business. One place she can go to is SCORE, the Service Core Of Retired Executives. They have run businesses, and can help her learn how to start hers. Their advice is free. Go to their website, and you can even find a local mentor for her.
    Good Luck.
     
  4. Bernie

    Bernie
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    Thank you for your response Joseph. I'll will be more patient from here on out.
     
  5. AnushaJain

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    Hi bernie:)welcome to baf:)thanx for joining baf community:)
    you can tell your friend to take the past records of that company thay how they works.take a legal document of work and keep it with her if some problem prevails,and do tell her to keep her eyes wide open to the things going on in here place of work,say her to be calm and cool,but remain active.
     
  6. Rocky

    Rocky
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    It seems that the company is looking to cash-in on your friends idea. Otherwise, why would a company offer a job to its potential client with no experience and knowledge about the job as well.

    You should advise your friend not to get involved with the company and also seek legal advice to protect her business ideas and seek another agency for her marketing requirements.
     
  7. jeff123

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    Your friend should take some legal help against that company...

    Also, why can't she start her own website and start promoting it on Social Media websites... Like Facebook promotes so many online stores and helps get lot of traffic and business...

    And there are number of good web designers available to help her get her website designed...
     
  8. Fergal

    Fergal
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    Personally I wouldn't be as negative towards the marketing company as other members appear to be. Bernie you said that your friend's product is "not necessarily original" and that the company are offering her quite a good salary plus a revenue share. It is not easy to get a new product off the ground and to make a success business from it, especially for someone like your friend who doesn't appear to have work or business experience.

    If the company concerned is offering your friend a good job and the opportunity to earn a revenue share, she should consider that opportunity seriously. The company concerned has already seen the product, the truth is that they probably don't need your friend to start producing and selling the product.

    In my opinion, if your friend is confident that she can build a successful business from the product herself, then she should probably do that. However, she should be aware of the fact that she will face competition from others selling similar products, even if they are not doing so already. If your friend is not confident that she can build a successful and profitable business, she should seriously consider the job offer, which based on what you say sounds very generous.
     
  9. Ted

    Ted
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    First off - an equity stake is a percentage of ownership. Companies, even small companies that are not publicly traded can still have stock. But just think of the equity stake as being a percentage of ownership of the whole company. Whether or not the company is a corporation or a partnership, it can still have different owners where each owns a percentage of it.


    Regarding their offer to your friend:

    There are a couple of possibilities here. 1) They could be trying to take advantage of her or 2) This could be the opportunity of a lifetime for her

    It could be some of both really which is probably the case.

    We don't know the people involved. So, it is very hard as an outsider to guess what their intentions are and whether these are trustworthy people or not.

    The whole idea that they just happened to be planning on starting a business like this, seems awfully fishy to me. It sounds more like they saw this opportunity only after your friend explained her ideas to them.

    And offering her a 25% equity stake seems like too little. I wonder how many other partners there are going to be and how much each of them will own. Again, sounds like they are just giving her a taste when she should be getting more of the pie, but maybe not. There could very easily be circumstances where it makes sense that she only gets 25%.

    What is worth more? 100% of a company where you struggle and fail or 25% of a very successful company?

    As others have suggested, the wise thing for your friend to do is find a local business attorney and pay for their counsel. You need to explain the full story to an attorney and get his/her opinion about what to do. Find a small law firm or a lawyer who works solo. You will get more personal involvement from a small attorney like that. Find one that handles small business matters.

    They will have the best answer for you by far compared to people on here who don't know the full story and can't speak to your friend. And chances are pretty good that this small business attorney is going to give you your initial consultation for free. It won't cost as much as you think and it will be well worth it.
     
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