SHARED EFFORT

ENTREPRENEUR
Jan 31, 2008

Need goods and services but low on cash? Make vendors part owners and share the rewards. "I strongly recommend it," says BRUCE LYNSKEY, clinical professor of management in entrepreneurship at Vanderbilt Owen Graduate School of Management. "Cash is absolutely dear, so if you can get anyone to accept at least partial stock options instead of cash, that's good." Lynskey witnessed the upside of this financing tool in the '90s as an employee of Wellfleet Communications, which began paying its delivery vendor, FedEx, partly in options instead of cash at the vendor's request. Wellfleet's hugely successful IPO made the stock a Wall Street darling, says Lynskey, "and FedEx made much more money than if we'd paid them in cash."