Freelancing Stack Exchange is a question and answer site for self-employed and freelance workers. It only takes a minute to sign up.
Sign up to join this community
I've been talking with a company about some improvements on their website and an app, but they don't have budget, instead they told me:
We have no budget. Simply none. We have future profits we can share. That’s it.
I would love to know from other similar experiences, the legal vinculations that we could have (I live in Spain and the company is from UK), how to calculate my future income and if there are any services to manage a project like that.
Step 1 - Run away.
Step 2 - Refer to step one.
I say this because this is how many freelancers get stuck doing work for free, or much less than they should be. Future profits mean nothing when you're waiting a year or two to see a penny for your work!
If they don't have a budget, you can stay in contact, but do not do any work for them. You will have very little to gain, and a lot to lose! There are many questions about this subject all over the site; I recommend checking some of them out.
I know it sounds great in the future (5% of all web site sales will go to you, for example), but it can take years for that to pay for the work you've done.
You probably should do what Luke (and every other freelancer I've ever heard talk about this) says and run.
Unless...
The web design and Ap would not be a lot of work on your part and you'd like to do them anyhow for the experience.
It's probably a form of mental illness on my part, but I'm very entrepreneurial and always very tempted by sharing profits. In fact, I prefer that idea to being paid hourly for something I create.
If you don't mind rolling the dice you might go for it, but understand you ARE rolling the dice and you probably will lose.
I have no ideas how the legal side of this works. How do you know what their profits are? I have an agreement with a company that wants to resell some of my software for a percentage that says they can see my books if they want. How else would they know if I am being honest? I also have software on my website (FastSpring) that will automatically redirect a percentage of sales to others. But even that I could change on them if I wanted, so there has to be trust and legal paperwork that makes you a partner and gives you the right to audit their books.
Also - if they have NO budget, they are either: 1. Not good business people 2. brand new with no track record - you have no way of knowing if they'll ever sell a single thing. Most new businesses fail. OR 3. They do have money but are not confident enough in this website and app to risk their own money on it.
Personally, Many of my most profitable business ventures came from saying YES! to an opportunity from a near stranger where really I was mostly helping them out, but it led over time to greater things. So you don't want to be too closed off to opportunity. But don't get stars in your eyes and think this company with no budget and no track record is going to make you a lot of money. If you go for it, be emotionally prepared to waste your time.
Hopefully someone else can tell you how you could legally assure they're honest regarding profits. And profits should be a percentage of the sale price of the app, not a percentage of their actual "profit" 'cause they could make a bundle and spend it on other expenses and have no "profit" to speak of.
As Canadian Luke suggests, it's usually a very bad sign if a company has no budget and promises future profits as payment. That means they are not even willing to get any loan (or can't) for their own project, which gives you a very big clue about how much hope they have to succeed.
Another big issue is the legal side of all this. No matter the contract you could sign with them, it's not a guarantee of getting paid even if you ever win in court and had a solid contract. And then there's the country-to-country issues and the limits of protection you get from the legal system when working for people outside your country.
BUT if you are really interested in the project for some reason and want to test the client before running away, you can always offer him to collect 100% of the money directly from the sales and once the full payment of your services will be completed, you can give him back the power to keep all the profits. You should also keep all the rights on what you've worked on and the admin privileges until full payment. It's a bit like a Joint Venture or a service loan, and you need to get some assets as a guarantee. Of course, that can work for an online business but that's about it and it has some risks too. And by collecting the money I mean you collect it yourself, not the client giving it back to you.
Clients will most likely refuse that kind of deal unless they truly believe in their business and really respect you as an entrepreneur.
There's 2 types of clients who ask for favors such as free work: 1) The spoiled ones who are used in asking favors and gambling with others' resources and time, and 2) the ones who truly have no access to credit. Run from #1 and see if there's potential for you with #2. For example,lot of very smart students don't have any budget and cannot get any loan because they don't have any credit history but they can still build businesses with a lot of potential. Maybe you should investigate why the client cannot even get a loan; simply ask, it's not worse than him asking you to work for free and it's fair.
But in general, people with no budget and who don't want to take risks for their own business usually don't even believe in its future success themselves. And maybe you shouldn't either.
