How to negotiate my interest and scope in new business?

Discussion in 'Starting a Business' started by lawrence mcdonell, May 24, 2021.

  1. lawrence mcdonell

    lawrence mcdonell
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    I have a business development opportunity with a former student of mine which I would like advice on. This student, Tom, who is Chinese, is a very energetic and capable entrepreneur and in the 10 years since he completed his diploma has built one of the leading digital media consultancies to the local Chinese community in Sydney.

    His new project is a robot coding school for 5 - 9 years. The robots are state of the art DJI Robomaster educational robots which are 20 times more expensive than the usual educational hardware used for robot classes in schools.

    He has a developed a suite of apps that coordinate updates, pics and course progress between the student, school, teacher and parents. His team has developed a bespoke Scratch version integrated with the robots API, to teach the coding.

    He has grand ambitions of running an independent national competition for these robots, similar to the one already run in China. His team is already 4th on the global DJI Educational Development Leaderboard. Having started in January he has about 10 Chinese after-school centres trialling it.

    The aim is to sell franchises of the model.

    My role is principally in publicising this offer to the local non-Chinese English speaking market.

    My question is about what would be the best way to assess this from my point of view.

    The reason for him needing me is purely cultural: because his English is "idiosyncratic" and accent is pretty heavy, he would have a problem building the trust and familiarity required for talking to schools or selling franchises to native English speaking Australians (current international tensions don't help).

    I don't feel he could reach the local market without a "local", me in particular, as we have the necessary history and trust to cooperate, and he hasn't shown much evidence in the past of working with non-Chinese.

    I think he realises (and it makes sense from a practical point of view) that he would need a native English speaker for future expansion even after I got the brand established in local schools, and he has stated that he would like me to stay on, and we would do great things together. For example, In future, the course can be expanded to high school and adult. One-off weekend workshops would be a good little earner, for example.

    The issue is what value should be placed on my being able to get this project into some local English speaking state schools, or even getting the first non-Chinese private franchisees? Achieving that would allow further expansion in schools and also into the English speaking franchise market, and without it, the brand could not easily break into that market.

    Should I be considering this as the critical thing, a separate thing? Is it the most important thing in establishing my stake?

    As the native English speaking party in the partnership, of course I will be affected by the sorting of other tasks associated with the business, for example, recruiting teachers who then need to be trained. Various other tasks haven't been itemised like helping to sort out the franchise documents and find other non-school venues to run the classes. We haven't talked about these in detail, only mentioned that they will need to be done.

    Should I simply consider a sales commission on each new client, and if so what would be a fair percentage? Should I ask for equity in the company, and how much (Tom has not considered this so far)?

    Tom suggests a 10% commission for local sales. For the other tasks, he is proposing paying me an hourly rate, plus "bonuses". He is offering me a free franchise.

    So it is not simply a business development role. In fact, defining the role to include all of this is what I need help thinking about!

    I guess an obvious issue is how my business relationship with Tom will change when and if new non-Chinese staff, whom I have sourced to do work, and also franchisees, join the business.

    There will be an ongoing need for clarification of what Tom says and for communication in general. I feel that since I acted as the bridge which will enable this to happen and without which the business can't expand, I don't want to see it become a source of trouble for my interests.

    Considering that there is a lot of different and unknown tasks that will likely come up to get this done, how much structure is possible and desirable at this stage relating to roles responsibilities for the English market? Tom is doing just fine by himself with the Chinese speaking local market.

    I really would like some advice on any precedent for a partnership in these kind of circumstances. I am happy to answer questions!

    Thank you! How would you handle this if you were me?
     
  2. Brazzerz

    Brazzerz
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    1. Work toward a win-win situation.
    2. Open the negotiation with a highball or lowball offer.
    3. Set an expiration date for your offer.
    4. Use mirroring to show that you're paying attention.
    5. Send clues with body language.
    6. Embrace the best alternative to a negotiated agreement.
     

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