I have come up with an idea for a new MarketPlace application. It's not something I expect to be hugely successful, but I think it does have some potential. I've approached a few close friends and colleagues, all of whom really liked the idea. A couple have offered to come on as partners to help develop the idea into a working application.

I cannot afford to pay them out-of-pocket for their time (nor do they expect that). I want to go ahead and solve the ownership/payment issue now before it becomes an issue. I'm leaning towards splitting ownership of the idea among the three of us, and letting that determine how any profits are split later on. Is this the right choice, and if so, what's a fair split? I came up with the idea and have already invested quite a bit of time planning it out (plus I'm sure I'll pay any incidental development expenses out of my pocket), so I feel like I should definitely have a larger share of the ownership. Is that reasonable?

I'm also trying to think of some way to reward partners based on effort. I'm not worried about someone signing on then doing nothing, but I do think it's quite possible that one (or more) of us might obsess about the project and put in significantly more effort. If that happens, I think that person should get a proportionately larger share. Any suggestions on how to structure that?

Probably this my help, the business growth measure is the number of downloads.

In cases like this, you have to really be careful,
1. before you guys go further, the first thing you must discuss is ownership and responsibilities
2. everyone should know what they stand to gain or lose from the start
3. the worst set of people to do business with are you friends, the only way to make it work is proper communication, ask questions, know their minds, dont just assume they will agree or understand, even before making any little decision or write up, carry them along, Nothing kils friendship more than this
4. get a lawyer and let them get theirs, everything you should should be legally backed up, like i used to tell my friends, if you wanna run a business treat it like one and if you wanna run a charity business its in your hands too
5. if you are discusssing business, dont see them as you friends, address them as your business partner/investors it gives every a sense of responsibility

AND THE LAST ADVISE
ive been in the ecommerce industry for over 4 years
If you dont know the business dont venture into it, It looks glaring from the outside but the truth is most of them are not making profit.
But if you put every thing in place and do things the right way, the sky is not ur limit

naijainfogaler thanx a lot for your candid advice, it is invaluable.

Just as naijainfogalery said, you need to define roles and responsibilities.

Since the original idea is yours, I think it is advisable that you have the majority share. I would suggest you own at least 50% of the company; that way, the other partners can not out-vote you thus changing your vision and strategy for the company.

Another thing to avoid is having partners that are not serious or partners whose interest and seriousness will wane with time. Tie their ownership to funds contributed. Make a simple evaluation of your company and tell them how much whatever they are contributing amounts to in terms of share percentage. It does not matter if you need the money now or not. Why I'm saying this is because human beings tend to be more seriuous if they are financially involved in something. Nobody wants to lose his money.

I also think that you should also manage the business at least till it is very profitable since it was your idea and you've probably put in lots of time doing and understanding the SWOT analysis.

Just my 2cents.

@cranky Thanks for your advice, i like the finance to stake part. But someone advised me to share it 50:50 so that we both have equal commitment and less argument. Now we are three.

More Info:
I have two Guys now, and they are gonna help develop the system. But i promise to give them something small just to serve as encouragement to get the system started. I am giving them the first sum at 25% milestone, at another 25% which makes it 50% again another, at another 25% again->75% and finally at the last 25% which makes it 100%.
This shows my own commitment and hey, i think it is good to pay them something even if it is not much so that i can be in the driver's seat.

They said they like the deal, but would like to know the amount of stake am offering before getting started.

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