I’ve been doing a lot of freelance lately and given the current economy, I’m glad to have the work. As well as, individual entrepreneurs, larger companies seem to be using more and more freelancers to fill the gaps in their resources as an alternative to take on the uncertain expense of full time employees (much to the disappointment of those looking for full time work).  In the case of the former, however, I commonly see listings and get direct offers to design/develop a web site in exchange for a stake in the resulting business.  While I’m sure some of these do pan out well for everyone involved, neither myself or any of my associates who also do freelance work have ever taken up these offers.  I thought I’d outline exactly why many of us are so hesitant about this arrangement.

1)  In the vast majority of cases, your average graphic designer, developer or designer probably knows little or nothing about the client’s area of business. While I could tell you about cafes I like, bookstores I frequent and websites I shop with, I couldn’t tell you the first thing about the ins and outs of the financial back-end  of those institutions.

2) Many of these partnership offers are not very forthcoming on information or details.  On one hand, its understandable that people who feel they have a unique and potentially lucrative idea don’t want to lose what they see as an opportunity by letting that idea get “into the wild”.  On the other hand, what rational investor (and let’s face it, that what this arrangement amounts to) would place his/her resources (time, energy and effort) into a project whose details are vague or entirely absent?

3) While its very common (and understandable) for a client to request a portfolio and/or references from a designer/developer, when was the last time a client offering a partnership offered their references, examples of success, detailed business plan or P&L (Profit and Loss) statement?

4) The failure rate in business whether they are “real world” or virtual is staggering to those of us how haven’t ever tried to launch a real business.  For every story of the billion-dollar web site there are untold numbers of URLs languishing in obscurity or abandoned to cyber-squatters.  While its easy to cite the vast capital some start-ups acquire, its also worth noting that many of them pay their developers/designers as well as offering them a stake in the project’s success.

If you had a car, would you sell a person that car in exchange for a percentage of their delivery service revenue?  If you were a building manufacturer, would you take a building project in exchange for a stake in the sales of the business that would occupy it?  Sure, there are probably good examples of arrangements that do just that, but if you are going to make a serious offer along those lines, be prepared to offer a detailed business plan, hard facts/numbers and signed legal contracts.  After all, it isn’t anything personal, it’s just good business.