Reference Letter with Mentors

An optional feature of the Entrepreneurial Development Program is the availability of a Mentor. When used, the Mentor is to be selected from the Advisory Board. Interview Advisors before making a selection. When you have chosen a Mentor, a Reference Letter, the working agreement between the two of you, will be drafted, signed by you and the Mentor and presented by the Mentor to the Advisory Board for review. When approved, the Reference Letter will be endorsed by your Advisory Board Chairman and given to the Center Manager for placement in your Center file. Your Mentor will then appear with you each month thereafter for your Advisory Board presentations.

Mentoring fees are paid by you directly to the Mentor. In addition, twenty percent (20%) of the Development Fee paid by you, the Participant, to the Center is also distributed to the Mentor. As your revenues increase, advancing the amount paid in Development Fees, the Mentor's fee paid directly by you will decrease by the same amount. It is your responsibility to calculate the reduced amount and advise the Mentor. However, in the event that Center operating expenses exceed the revenues produced by Program and Use Fees, then Development Fees are used to cover shortfalls and distributions of Development Fees are reduced accordingly.

The Reference Letter will define the expectations, working arrangements, payment schedule, release of liability, etc., between you and the Mentor. It will also include the following clauses:

1...It is understood and agreed that this Reference Letter shall in no way be in conflict with the Participant's Agreement(s) with the Center. Should there be a perceived conflict, the Center document(s) shall prevail. The Center, as an interested observer to this agreement, will from time to time, review and provide input as relates to the supervision of the Entrepreneurial Development Program.

2...The Mentor's fee is the lowest fee available from the Mentor and is available only to Center Participants. The specific amount of Mentor compensation is decided by Participant and Mentor, is privileged information and will not be disclosed except to the Center Executive Committee. Should Participant terminate or breach the Agreement with the Center, the Mentor's rate will double, retroactively from the first meeting between Mentor and Participant.

After working with a Mentor for some period of time, you may have accomplished the objectives you sought. You may conclude your agreement with the Mentor and select another or not, as you decide.

The Sample Reference Letters following can be found on the SCA Main computer in the ebc directory under the file name Mentor.  You may copy this file as necessary as the basis for your own Reference Letter.  Please do not change the original computer file or the Center Manager will get you.

Sample Reference Letter One

(from Mentor to Participant)

Mr/Ms. Participant

            Thank you for the opportunity to get acquainted with you and your business. You have an interesting business with an impressive market potential and a proven profit opportunity.

            I feel that my business experience and contacts qualify me to make a significant contribution to you and the profitability of your emerging business. I am available to work with you in achieving greater profitability.

            I have drafted this Reference Letter to explain Mentoring so that we both will be in agreement on the terms and conditions under which we will be working together.

            Review this letter carefully, and if it meets your approval, then please sign, date, and return one copy to me. If you feel modifications or clarifications are in order, I will be happy to discuss those with you.

            Under this Reference Letter, I will be engaged as a Mentor to advise you in the operations of your business with the express purpose of increasing your profitability. I will be working directly with you and your Center Advisory Board, and at your direction, with your designees. I will exercise no authority over your personnel, customers, or suppliers.

            You and I will agree on a number of management tools to be installed in your company, and the priority of their initiation. A schedule of these will be attached to, and made a part of, this Letter. I will then advise you on their creation and advise you on their most profitable utilization.

            My educational background, business experience and contacts are intangible assets. While I will be advising you to the best of my ability, it is understood that I cannot be held to the standards of a professional with specific expertise in a particular area, such as a CPA or Attorney. You will be under no obligation to follow my advice.

            I am an Advisory Board Member of the Entrepreneurial Development Center (Center), and it is understood and agreed that this Reference Letter shall in no way be in conflict with the Participant's Agreement(s) with the Center. Should there be a perceived conflict, the Center document(s) shall prevail. The Center, as an interested observer to this agreement, will from time to time, review and provide input as relates to the supervision of the Entrepreneurial Development Program.

            As a Participant in a Center Entrepreneurial Development Program my Mentor's fee is the lowest fee available from me. This fee is available only to Center Participants. The specific amount of my compensation is decided by you and me, is privileged information and will not be disclosed except to the Center Executive Committee. Should you terminate or breach your Agreement with the Center, my rate will double, retroactively from the first meeting between you and me.

            To advise you most effectively, it will be necessary for me to spend many hours learning about your business and keeping abreast of your industry.  In addition to research and study, I will spend a great deal of time thinking, planning, organizing, networking, writing, telephoning, etc.  it is difficult and expensive to accurately account for this time.  Therefore, to hold down the costs of Mentoring, I recommend that I be compensated at a flat rate of $    per month.  This fee will cover                 hours per                    spent reviewing reports, advising, planning and meeting with you once a week.

(Reference Letter, continued)

          I can frequently be of special value beyond the roll of Mentor, therefore if you choose to use me in additional capacities, I will be:

            A. Compensated at $_______ per hour for any time spent on the production of specific projects which you assign to me, or I will contract for a turn-key amount at the inception of the project.

            B. Compensated for introductions or arrangements leading to mergers, acquisitions, or capital infusions, if any, at a rate of 5.0% for the first million dollars; 4.0% for the second million; 3.0% for the third million; 2.0% for the fourth million; and 1.0% for the balance. Said compensation to be paid as funding is received.

            C. Compensated at a rate of 5.0% for any franchise sales, license fees, royalties, or commissions for a period of two years from the first purchase or transaction from any contacts which I introduce to the company. The company will supply a monthly accounting of same.

            D. Compensated for recruiting or introducing any employees that the company elects to hire at 10.0% of the employee's annual compensation, to be paid $_______ monthly for 12 months.

            E. Reimbursed for any of my actual expenses which you authorize in advance.

            My compensation plus documented expenses will be paid at the 15th and last of each month. My compensation should be treated the same as payroll, with no invoice required. Please feel free to discuss these charges or rates with me at any time. These rates may be modified by mutual agreement in writing.

            I will submit written reports periodically confirming progress on all assignments. You may also request a written report on any project at any time.

            This engagement will continue from month to month until canceled by either party, by giving 30 days written notice to the other, except that compensation earned, or to be earned under paragraphs A, B, C, D and E above will continue until fully earned and paid.

            All sensitive information which you provide to me in the course of the Mentoring assignment will be held in the strictest confidence.

Signed this date ________ day of __________________, 20__.

AGREED AND ACCEPTED

By:_______________________________________             By:__                                                   ___

   Center Participant                                                                                                               Mentor

Reviewed and Approved By:                                                                Date Approved: ___/___/___

                                            For Center Advisory Board

Sample Reference Letter Two

(from Participant to Mentor)

DATE: ___________

TO: __________

FROM: __________

            Per our discussion, I understand that we will meet ___________ to discuss techniques and strategies for enhancing my entrepreneurial skills and advancing my business. Although we will focus on three areas - marketing, operations and administration - I understand that your area of expertise is ___________ and that you may refer me to others for advice on ___________ or ___________.

            It is understood and agreed that this Reference Letter shall in no way be in conflict with the my Agreement(s) with the Center. Should there be a perceived conflict, the Center document(s) shall prevail. The Center, as an interested observer to this agreement, will from time to time, review and provide input as relates to the supervision of the Entrepreneurial Development Program.

            Your fee is the lowest fee available from you and is available only to me as a Center Participant. The specific amount of compensation is decided by me and you, is privileged information and will not be disclosed except to the Center Executive Committee. Should I terminate or breach my Agreement with the Center, your fee will double, retroactively from the first meeting between me and you.

            Mentoring fees are paid by me directly to you. In addition, twenty percent (20%) of the Development Fee paid by me to the Center is also distributed to you. As my revenues increase, advancing the amount paid in Development Fees, the fee paid directly by me will decrease by the same amount. It is my responsibility to calculate the reduced amount and advise you. However, in the event that Center operating expenses exceed the revenues produced by Program and Use Fees, then Development Fees are used to cover shortfalls and distributions of Development Fees are reduced accordingly.

This engagement will continue from month to month until canceled by either party by giving two weeks written notice.

            All sensitive information which you provide to me in the course of the Mentoring assignment will be held in the strictest confidence.

Signed this date ________ day of __________________, 20__.

AGREED AND ACCEPTED

By:_______________________________________             By:__________________________________________

   Center Participant                                                                                                                                Mentor

Reviewed and Approved By:_________________________________________               Date Approved: ___/___/___

                                    For Center Advisory Board