HELP please tell me how much to charge.?

Question

Hello
I have been asked to go into bis with a co and they are going to supplie all the money and i supplie the know how.
What percent of the new biz should i own.
They told me to let them know how much of a percentage would i expect.

Answer 1

Partnerships of this nature are usually a bad idea and don't end well. However, to answer your questions think about the following.

If you "own" less than 50% of the business, then you are the lesser of the partners. Think about it as if you each get 1 vote in any business decision for each 1% you own. For example, if you own 30%, you get 30 votes; if you own 75%, you get 75 votes. Now, when it comes time to make a decision, if you own less than 50% of the business, then your vote doesn't count as much as your partners, and he will "overrule" your say in the decision.

So, in a nutshell, if you own less than 50% of the business, you are essentially a glorified employee. You need to make certain that you have a lawyer or someone knowledgeable draw up paperwork that will stand in court that details explicitly how much of the company you own. Otherwise, if the other guy is supply the capital, what's to stop him from just selling the equipment one day and taking the proceeds as his "share"?

This and many other situations are why these types of informal partnerships are financially shaky.

Good Luck.

Answer 2

It really depends on how much he's putting up, and how much you expect the business to earn.

If he's putting up $10,000, and you expect the business to generate 100,000, then giving him half the business gives him a rate of return of 500%, while you just basically have a job.

Offer him something like a guarantee of the first slice of the profits up to a certain amount, and a smallish share of the profits after that.

As you consider the share to agree to, look at it this way: If he puts up say a quarter of a million to get half of the money YOUR EFFORT makes, would you sell all of your efforts for a half million?

It really depends on how much he's putting up and how much you expect to earn from it, but the fact is, he's making a loan, you're doing the work. If it's a good business model, he can be replaced, you can't.

Answer 3

It's all about how much you personally want to invest in the company and how much you think your input is worth. If this is a company you're passionate about and think you can take it off the ground, you should at least consider 50%. You can also explore the option of increasing your share based on how much sales you end up driving for the business. You can assess your growth on a quarterly or even yearly basis.

Answer 4

I'm assuming you mean business (bis) and company (co) which will supply (supplie) the money.

Seeing as you're investing no capital whatsoever I'd not think you should ask for more than 15%. If even that.

By the by, if you're going to be involved with a professional company and business, you really should learn to spell and what words to capitalize.

Answer 5

Not sure why they would do this. If it is going to be owned by both then at least 50%. If you have no insurance or protection whatever percentage you own is what you will be responsible for. If you want controlling interest (and liability) then go for 51%. Good Luck.

Answer 6

The first thing to remember is that if you own less than 51%, they can tell you what to do. That makes you an employee. If your knowledge is worth the money they are willing to invest, YOU ARE the business. If I were in your shoes, I would tell them to take a hike, finance the business myself and retain 100% ownership.