A question that is often asked by entrepreneurs and emerging businesses is how much equity to give key employees and new hires.

While there is no correct answer to this question, there are guidelines and key criteria to consider. The key criteria are 1) other compensation and 2) the risk profile of the venture.

Other Compensation: Equity compensation is one component of an employee's total compensation. Other components include base salary, bonuses, benefits, etc. For each position and geographic market there are standard compensation rates.

Market research is critical to entrepreneurial success. It is absolutely crucial to understand customer needs in order to successfully launch a new product. Likewise, market research must be conducted on the industry, competitors, etc., in order to flourish.

However, formal market research studies are not always critical. Rather, by asking people who can offer good estimates of customer wants and needs, ventures can answer many questions more quickly and inexpensively.

Consider the following queries and suggestions:

Query: What types of toys will sell well this holiday season?