Evan Carmichael advises a chef considering a partnership with only 5% ownership to research industry norms and set a personal minimum she won't go below. He argues that the ability to walk away from any deal protects your worth, whether in equity splits, customer pricing, or employee compensation.
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If you're about to sign a deal and you're not comfortable with it, you have to be willing to walk away. You have to be willing to walk away and know that something better is on the horizon. Because if you sign a deal that you are uncomfortable with, you're not going to be happy. It's going to haunt you, probably for a really long time. Hi, I'm Evan Carmichael. I believe that hungry entrepreneurs deserve help. And today I'm answering a question from one of my newsletter readers, Marita. And Marita wrote a really long email. Marita, we have got to get things a little more condensed. Now, Maria is a chef. She's a great chef, and she's starting a business with a partner of hers. The partner's putting up the money, she's going to be the chef, and she's wondering what is a fair compensation. So her partner's putting up the money, doing all the marketing, and she's going to be working the restaurant, doing all the cooking work. So she was assuming she would get a 60/40 split, where the investor marketing person got 60% and she would get 40%. Now the person's coming back to say that she wants 90%, and Marita as a chef would get 10%, but would lose half the shares to her employees as compensation as they grew. So she would end up with 5% of the business. She wanted my advice on, is this a deal that she should go with or not, and what to do. So Marita, this sounds like a raw deal. You know, if it were me, I wouldn't take it. But it depends on your situation. How badly do you want this restaurant business to fly? Do you see this as a long-term venture or not? Do you want to be able to open multiple restaurants or not? And do you see this business partner as somebody who you can work with for the long term? There's a million different ways to make a deal, and the most important thing is that you're comfortable with it. You can go and look and research other deals and look at when chefs have come and taken over, how much they've gotten. That might give you some more comfort to see what might be more industry norm. But at the end of the day, you have to feel comfortable with it. You have to feel comfortable either with, like, if she sticks to her guns and she's saying, that's all I'm gonna give you, you're gonna end up with 5% of the business. You either have to feel comfortable with having that 5% and growing and building this hopefully successful company and not having it eat at you that you're only earning 5%. That's dangerous. If you're gonna build this highly successful company, think about yourself 5 years down the road. You put all this work in and you only have 5% of the business. Is that gonna eat at you every day? Because if it is, you can't take that deal. On the flip side, you have to be willing to walk away. For any type of deal, you have to be willing to walk away at some point. What is that percentage where you walk away? Is it 5%? Is it 10%? Is it 20%? You have to have a number in your head that you feel comfortable with and stick to your guns. She's really important to this deal, but hey, so are you, right? You can't let people beat you down. If you feel you have a lot of value and you deserve more than 5%, then you fight for it. You'd be willing to walk away. This is not just for business partnerships, this is for customers, this is for employees, this is for every negotiation you have. You have to be willing to walk away at some point. When I work with customers and I'll quote them on something it's usually way higher than they expect. And I'm willing to walk away because I know they're getting huge value even though it's way more expensive than what they thought it would be, way more expensive than what my competitors might charge. I'm bringing way more value than anybody else, and I believe in that price. And if they pay it, I'm happy to do work, and I'll feel good about myself, and I'll feel great about the work that I'm doing. And if they don't pay it, then I'll walk away, and I'm happy. And I know that I've walked away from a deal from somebody who doesn't respect and value the work that I do. I wouldn't want to undercut my prices, end up doing work that I know is huge value, and have people not pay for it. So I don't know if I answered your question for you. There's no right answer beyond you have to feel comfortable with that amount. Do not let it eat at you for years as you put all your work into it. 5% may be fair for you. You may think, "Okay, that's enough." I'm not telling you that you need to go for more. I would go for more, but you don't necessarily have to go for more if you're happy with it. But if it's going to eat at you, if you're going to look at that number, you know, every day and think about all the work you're putting in and you're only pulling out 5% of this business, then figure out what your number is and stick to it. And know that if you don't get that, you're going to walk away and you're going to find another opportunity. I hope that helps. You got some tough thinking ahead of you. For those of you watching, if you like the video, please give it a thumbs up below. It makes me want to do more for you. And hey, I want to hear what you have to think. Please leave a comment about this video. If you have a question, please leave it in the comments below. I love seeing those come in. It makes my morning every time, even if you're just saying, hey, love the video, or shout out from wherever you're from. Thanks guys, and I'll see you on the next episode.
