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NEED ADVICE ON PARTNERSHIP

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greenarrow
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NEED ADVICE ON PARTNERSHIP

Postby greenarrow » Wed, 27 May 2009 3:34 pm

Hi

I am being ask to run a new start-up business.

There are a total of 4 of us in this partnership. They are all currently working, and so would not quit their jobs at the moment.

I am tasked to write a business proposal, but am now stuck at this capital and shareholding portion:-


1. Assuming the total start-up capital is $40k, how much should each of the 4 of us contribute towards the start up capital? Should i be contributing less cos i will be the person managing the biz fulltime.............???


2. I do not have spare cash, however a good friend can lend this money to me. but i do not want to borrow or take a loan to come up with this capital, what is the best proposal i can come up with regards to the shareholding???


3. All the 3 persons are asking that the start-up capital be as minimal as possible, pay office rent, pay for 1 admin girl salary and is best is pay all these overheads from the profits derived every month from the sales........... the thing is i have this feeling that they are hinting that i should not draw a salary for the start until profits comes in.................all three are holding managerial positions in MNCs, then i taking the plunge to run the biz fulltime...........what do you think is a fair salary i should ask?


4. Last but not least, i can't get along with one of the 3 persons. how to convince the others to exclude this person out of this partnership?



Will appreciate any advice or find out what you will proposed if you were in my shoes.

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ksl
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Postby ksl » Wed, 27 May 2009 10:50 pm

If you are already having conflict with one partner, how could it ever be a good relationship?

If you are not committing financially it wouldn't be fair that you get an equal share, after all, they are risking the cash, and you are seeing it as a paid job....and still wanting a piece of the action which is also fair enough.

If I was the investor, i would be worried about, your motives and capabilities to make it a successful business, so I would suggest a fixed wage and 10% of the company. Although you must also realise that a business start up, doesn't mean 3 investors throw in all the money, so that you can live comfortably each month, without taking any risk.

You have to see the logic in this kind of partnership for it to be realised, so you should expect a low wage, until the company is making profit, and the quicker you make it profitable, the quicker you may get some of your investment back each month if you require it, the remainder you reinvest for the better of the Company, It's very important for the company to be cash rich, for growth prospects, and this is what you must be looking at.

Start up's normally go through a difficult 3 years, if you can survive that long, their maybe a chance of success...but management needs to be strictly controlled and I can imagine with 4 partners, a lot of falling out is inevitable, if there is one that you do not get along with already.

Doomed to failure, if you cannot work together for the good of the Company, or if you put your own egoistic wants and needs first. Only the dedication and passion will see it through. In this case of 4 partners, i would look at getting independent guidance occasionally to ensure that everything is going according to plan by some other business advisor..

Although the business plan is easy enough, the preparation and evaluation of the idea needs to be researched deeply, and not just skimmed over, this is the most important part of the project to see if it is at all feasible, in the first place.


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