26 Mar

However, there are times when your startup shouldn’t pay equity

  • An informed or instinctive lack of trust

Trust between a startup and its marketing firm is essential to developing a successful relationship. Any potential partner must be vetted like a potential employee; if the trust isn’t there, walk away.A few telltale signs of an untrustworthy agency include infrequent correspondence, incomplete communications and a tendency to point out possible problems but not offer solutions include an earn-out in the contract — don’t hand over equity until the marketing firm has shown some results.

  • Wants placed ahead of needs

Getting carried away is easy to do, but don’t think about marketing until the product is ready to go. Forty-two percent of startups that fail do so because there’s no market need for their product. The ducks all need to be lined up with a product in place before a partner is brought on, or everybody loses.

  • Cultural discord exists

Startups shouldn’t offer equity to marketing firms that don’t fit their culture. Don’t throw around equity like Monopoly money. Month-to-month contracts offer a great alternative to marketing initiatives that demand deeper pockets, and they allow startups to evaluate potential partners.

Do your homework on potential partners: Study their company websites, talk to other clients and find out about their core values. Remember that playing nice doesn’t always mean sharing. If they don’t fit, don’t partner.

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