Blogging

Should You Biz-Blog For (Sweat) Equity?

Brian Clark mentioned equityas one form of payment for corporate blogging. If I’ve interpreted correctly, I’m assuming that Brian means things like accepting options, shares, or a percentage of partial payment from a client company. (I’ll continue on the assumption that that’s what he’s saying.)

It’s a great idea, and if you choose that form of payment, either partially or completely, understand fully what you’re getting and giving. You still need to clearly define for both yourself and the client what your fee for the project is. How you choose to accept payment is secondary.

For example, my brother runs his own PR/ad agency with a biz partner. They’ve got an “angel” project whereby they do work for both cash and equity for select, carefully screened client companies (percentage of future revenue and/or shares and options). Sometimes the effort hasn’t been worth it. Other times it has. They also do a great deal of charity work for non-profits in return for the awards it wins them, as well as links from the resulting high-traffic sites.

So other bloggers want to go the equity-for-pay route, select your clients carefully. Big companies are more likely to offer shares/ options rather than a percentage of profits. Small businesses and startups may not make a profit for a while. In the latter case, you may want to stipulate partial payment in cash, payable under typical contract terms. The rest of the payment, if payable as a percentage of future revenues, should factor in the duration and a reasonable interest rate.

I.e., what would you lose in interest by not receiving a full cash payment at the end of the project. The payment difference and interest together should determine what the value of equity should be. So if you do a project worth $10,000 but accept $2000 cash and $8000 equity over four years, factor in four years of interest. Essentially, you are loaning the client $8000 for four years.

For the sake of argument, say that the client would have to pay $1000 in interest to a bank to borrow $8000 under similar terms. Then the value of equity to you should be $9000, payable under whatever schedule you agree to – weekly, monthly, yearly, options, shares, barter (products + services), etc.

Of course, all this gets complicated, especially in terms of declaring your income on your tax return. (Even services bartered are supposed to be declared under most conditions, so keep that in mind.) Having a discussion with a good accountant is highly recommended.

Have you blogged for equity? Please feel free to share your experiences here. We can all learn from them.

Author: Raj Dash

4 thoughts on “Should You Biz-Blog For (Sweat) Equity?

  1. If somebody will offer me a project to do an online shop I will always try to achieve that joint venture approach. Otherwise my personal motivation to support that project would drop to zero.

    Project work means working on a schedule or milestone base. Start today finish tomorrow. Every little change request later means a new project or cheap support (zero for nothing).

    As Brian said the initial production costs must be covered. Future support can be handled through a provision. The shops success will also be my success.

    Great point about why people pay you for: You are the expert and they are not.

  2. Thanks for clearing things up, Brian. Your idea sounds more interesting, less risky, and affords more control over the results.

  3. All your points remain valid Raj, but my biz model is basically doing joint ventures — project level products that I often come up with along with a subject matter expert and take 50% for essentially producing and marketing the result.

    It’s still possible to gain company-level equity with start-ups, but that’s the riskiest deal you’ll cut. Better to find someone with great credentials that can help you build an original information product, and get paid because you are the marketing expert and they are not.

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