This is final article of the 4-part series for achieving success in your entrepreneurial endeavors. The series was created by a business professional who draws from 40 years of experience working with Fortune 500 companies and high-growth startups. He writes under the pen name J.T. Jamison and Barcinno published a new chapter in his series each Wednesday during March 2014. For part 1: The Insider’s Secret, for part 2: Finding Your Mentor, for part 3: Building The Mentor Relationship.
Climbing Mt. Everest is easily one of the most challenging and dangerous endeavors anyone can undertake. To the brave and loyal Sherpas that continually make the journey, what is their motivation? Money? No, not really. Sherpas certainly have to support their families, but their jobs are certainly not close to the highest paid of daunting professions. So what motivates them?
A true Mentor, like a Sherpa, is not in it for the money and most likely they’re not doing it for the glory either. Their primary motivation is that they like what it is that they do. They have a unique skillset and it is extremely valued by those that reach for the sky. The best mentors enjoy the personal satisfaction of knowing that they played a major role in the growth of a younger protégé and success of a startup business.
With all that said, fair is fair and few individuals have the financial means or desire to work for nothing. Your mentor will invest considerable personal time & thought, share your many ups & downs and, in the end, should you be successful, should not this valuable contributor share some of the rewards? Of course they should!
There are many ways to compensate mentors. The most often used method is with a percentage of the business. Opinions vary here, but in most cases it is between .5 to 1% of the firm’s value. Such stock options can also be tied to time involved and can vest over several years. In addition, many startup founders formalize the mentor’s involvement by adding them to the Board of Directors and providing a modest compensation with personal stock options in line with other members of the board and investor principals. Because of the many talents and strong business experience of mentors, it is not unusual to actually hire them in a management capacity or consultant capacity to assist with the day-to-day operations of the company. Smart CEOs seek a variety of expert opinions and value outside Advisory Boards that meet semi-annually or quarterly to provide feedback on a number of business issues and opportunities for the firm. I’ve seen an instance where a creative CEO has charged the mentor with establishing, recruiting, organizing and running these Advisory Board sessions and then compensating the mentor accordingly. This is but one of many key projects that an involved mentor may wish to participate in. Every Founder / Mentor situation is unique and the compensation plans can include all of the above. My recommendation is to openly discuss this compensation topic with your mentor and seek to find that plan that serves you both.
In summary, as an entrepreneur, you have already set yourself apart from the masses by taking the first major step and starting your own business. Your journey will encompass many small victories and no shortage of surprises or setbacks. Enjoy every day. May you learn more than you thought possible, grow more than you can imagine, overcome every challenge in your path and reach the pinnacle of your personal Mt. Everest. And once there, may you plant your flag on the highest peak and appreciate that unbelievable accomplishment… together with a true mentor and treasured friend.