Snafu with New Business - npc, your Thoughts & Opinions PLEASE Options

[markb]

In my opinion a business that hasn't even gotten off the ground and has these types of problems - Scott should find another business opportunity, this just isn't going to work. (IMG:style_emoticons/default/idea.gif)

Being a small business owner myself, (IMG:style_emoticons/default/agree.gif)

[campbellcj]

My $.02 since you asked...walk away from any delusions of "50/50" partnerships.

In a small business, long term success and livable stress levels are more likely if you have AN owner, and then the "hired help". Active or inactive equity minority shareholders/investors are fine, but on a day-to-day basis, only 1 person can really run the show.

Even though I am the CEO of my employer, I am still "hired help" and satisfied with that (for now). Even though I make more than the main owner and have a ton of day-to-day control, ultimately I still have to live by the "golden rule" just like 99.9% of us do. He/she who has the gold, rules...

FWIW our company started off as an 85/15 split. The 85% guy was the MBA with the concept and financial backing; the 15% was the dude who had to bust his ass nights and weekends (working two jobs at first) to make it actually work. Go figure.

[rick 918-S]

Pass on the partnership for now, get a part time or full time job doing anything, put every dime and penny you can find in the bank, sell all the toys (accept the 914) and do the thing yourself next year. If it's a good business the oporutunity will be there next year. Tell your friend you are not comfortable mixing the freindship with the business. Truely 99.99999% friendships end in ruin because of self serving self interest that develops over time. In this case you haven't even opened the doors yet and it's started already.

Run the other way screaming in terror!

I'm sure your example was a simple one for the purpose of helping us understand what you are attempting. But Don't forget when calculating your cost of doing business enter all wages. The most important thing for a business owner is to pay yourself. Without a pay check you won't have any paperwork to show a bank you earn real money. You won't be a "good risk" for a "REAL Business loan" Include your hourly wages for working the business, doing the books, late night inventory, stocking shelves after hours, etc. Figure your employees and partners wages. Then divide the profit at the end of the inventory cycle or year. Don't forget in retail you may have seasonal losses that won't show up monthly. You loss money from shoplifters, and damage.

After everything is said and done you may discover the potencial for profit isn't worth the time invested... or not...

Good luck, WEre pulling for you (IMG:style_emoticons/default/wavey.gif)

[murphys]

The advice to pay yourself and partner a real wage (Idino 21 and Tat2d) is very important, if you are going to be the exception that proves the rule, i.e. do not go into business with friends or family.

I know of very successful exceptions to these rules, but you do need an LLC Operating Agreement or Partnership Agreeemnt written "up-front" and with the best possible projections and communication between you and significant others now.

You are going to be very resentful if cash flow does not support a staff and you get to spend every waking hour in the store.

Mail me off-line, I have many such forms that you both may want to look into before going much further.

[campbellcj]

Another thing to consider if you write up a limited partnership type of agreement (or anything for that matter) -- be sure each involved party has a well-defined "out" (buyout clause or whatnot) in case one person wants to part ways and the other(s) want to keep the business alive. You don't want to be in a situation where you've got to liquidate the whole business just to unleash one partner.

Also I would advise talking to an accountant and/or lawyer about the appropriate organizational structure for the best tax treatment. It will cost a bit up front but could save you big time in the future.

[SLITS]

Hey numbnutz....guess who's Greek?

I would have never guessed, being the upstanding gentleman that you are.

[Toast]

..........then both other parties need to hire employees and stay out of the business and just split profits.

Thanks! Thats exactly the words I was looking for.
The downfall to that is that you have others running and working your business, so you loose some control, and its a little less profitable.

But, you do have the opportunity to trade Your time for the profits that your employees are earning for you. (Just hope they are doing it the way you trained them.. (IMG:style_emoticons/default/unsure.gif) ) Somethimes the loss in profit for employee cost is more satisfying than putting in all your time for the extra profits.

IMO, I say dont do it. Doesn't sound sucessful. But I am not a business owner, so I am not sure.

Good luck.