HugeNerd - 9:53 pm on Sep 29, 2008 (gmt 0)

One different approach is to partner with someone who has the resources that you need to spend cash on. With public spending down, seek out those companies that have capacity and are open to new product and market development but lack innovators. The downside is you are only going to retain 25-40%, but its still an option, once it bears fruit you can go alone with other ideas.

I am a fan of this idea (let's call it the indentured servitude model). Why not approach a manufacturer? Rather than drop-ship with a net-30 scheme on an account, you can simply be their web entity. If they don't have a web presence already, you'd hope they see the inherent value -- makes your sell that much easier. You can offer clear value (sales tickets, revenue) and mitigate, maybe even eliminate, the personal risk. All of the fun, none of the hassle. You, as a web entity, see improved asset turns over a traditional drop-ship model because they would give themselves (and you) priority... It's like creating your own job within a company.

I'd set it up on a contractual basis: 5 year deal, 15-25% gross profit on first $xx.xx, 25-30% on second $xx.xx etc. -- here is where you 'pay' as you receive nothing if they don't make money off the site -- and throw in a clause about a benefits package. You can even maintain your own company name, url, etc and they can outsource "internally"... they own you, but you don't necessarily work for them...I guess I am angling for a wholly owned subsidiary.

It'd take a lot more wrangling, maybe, but there is potential...you'd be very, very, very surprised by how many manufacturer's and wholesalers are entering similar agreements (at least in my industry). Some of them are even letting competitors run their websites -- they understand their own limitations and savvy business owners, at least in the small to midmarket cap I have the most experience with, are aware that in such situations it is easier and cheaper to let someone create and develope on a predetermined budget than it might be to create a new division of the company.

[edited by: HugeNerd at 10:09 pm (utc) on Sep. 29, 2008]