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Q  "Preparing to negotiate"
I'm a successful sales rep (100K +) in a very stressful business (litigation copying). Its burning me out!! I've been approached by a small document storage company to implement and run their sales and marketing dept. Sales last year of 400,000; without any sales staff. The present owners are offering 5% equity with options to 20%.

How do I negotiate salary and commision? What is standard in the industry? What questions should I be asking the prospective employers and myself before moving forward?


A  You're asking me to be an expert in your businesss. I wish I had time to know all there was to know about every industry people post about, but I don't. Here are some suggestions:

  1. Decide what would truly make you happy, but be realistic. Establish some numbers that would make your life comfortable, and which would motivate you. Don't worry about industry standards. This is a place to start. People get too worried about what someone else is making. Focus on you.
  2. Figure out what value you'll add to the employer's business. How are you going to make a material difference to it? Try to estimate how much profit you could bring to their business, above and beyond what they're making now. Check your desired income and options against that. Remember that the owners took the risk to start this business -- you're walking in to a pretty risk-free situation. Don't expect to be paid like a founder. But expect that if you meet the goals you and they have established, you should earn a healthy living that will make you happy.
  3. Test against the competition. It'll take a lot of work, but it will be worth it: do research on competing companies. Talk to some trusted customers that you work with now. Ask them, in confidence, who they know in businesses like the one you're considering joining. (They know lots of sales reps.) Get them to introduce you, then learn what you can about pay scales and such. (This is also a great way to find a new job.) Use your contacts.
  4. Be direct. Because the company is small, it will be difficult to get much specific info that will be pertinent. So, ask the owners about 'what's standard' in their industry for compensation. You'll learn a lot from their reaction. Be up front -- and ask them to be. Just because you're negotiating doesn't mean you have to be adversarial. Let them help you figure out what's a good package.
  5. Don't count on stock options, unless there's an open market for the stock. There's just no way to tell where private stock will go. Make sure your other compensation is going to cover your needs. Options are icing. I've worked with lots of people in Silicon Valley -- the home of risk-laden stock options. No one with any experience there takes options too seriously.

Hope that helps!

The Headhunter


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