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New Partnership/Protocols/Thoughts

 
 
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JustDoItForever
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PostPosted: Thu Jan 12, 2012 8:25 am    Post subject: New Partnership/Protocols/Thoughts Reply with quote

Ok here is a scenario and I need some advice from the experts here. This is a query on joining in a business with the owner who needs help to expand. I am not too clueless as to think there aren't tons of variables in every "situation," but I need to know the far right and lefts of the situation so at least I know if I am on the right track and/or who is being unreasonable.

Here is the info I have to help you help me:

John (the owner) has asked me if I could help him grow his company. I said yes, He has seen my resume, history and education ad knows I will be a great fit, in his own words, and his hope is to eventually let me run most of the day to day while he ventures onto another one of his projects, and then wishes for me to join him on that process as well. I.e., it has been pretty well agreed that he is not looking for an employee, but a partner who is just as capable, if not more, of running and expanding the business while having a good knowledge of many aspects of the specific business.

The company's profits and gross are unknown and it seems unlikely that it will be divulged to me in full. My guess is that it grosses about $100k per year if I had to pick a number. However, he states that most of these earnings go right back into the company, so he has very little profit left to play with in the end. Therefore, to me, he seems to be saying that his profits a very low or insignificant.

His proposal to me was to offer me 15% of the company, with no other compensation at all (monetary or otherwise), while he requests I do 15 hours of real work per week for him/his company. He is willing to put the 15% agreement into an escrow, where after a 3 month "probation" period, "IF" he thinks he can still use me, then I will be awarded that equity. If not, we walk away, very little (couple hundred dollars at most) to no compensation.

My proposal was to obtain 20%, and send out a delayed invoice every month at a reduced hourly rate from my normal rate, which he can pay me IF and AFTER we part ways, since he has "no funds to pay me" at this time. I have also reduced my hourly wage by 60% of my normal rate. But one of my advisors told me don't even go there, just ask for an hourly of $30 (never less than 60% he says) that has to be paid every week.

He had also talked about sending me some additional independent business, which at this time, he has retracted, so no compensation at all there either.

If it gives you a better basis to give me advice, the business is a "laptop repair service." There may be about 4-5 others who are doing the same thing in our county, who are larger and more established than his. However business is pretty good overall, enogh to share, but to dominate, it will take something special, which I can provide.

Anyways, from your experience, please let me know your unadulterated opinions on this "deal" and how it "should" pan out.... thanks!
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paul
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PostPosted: Thu Jan 12, 2012 9:41 am    Post subject: Reply with quote

Doesn't make sense to me. What good is 15% of a company that makes nothing? If he's not willing to divulge information about the most basic of things such as profit, then you have absolutely no idea of measuring what 15% of the company is worth. It would seem far simpler (and safer) to say your hourly wage is x, and to work from there. If he's happy with that, then fine... if he's not, then I think that tells you all you need to know.
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Kay
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PostPosted: Thu Jan 12, 2012 11:46 am    Post subject: Reply with quote

I agree with Paul - how can you do business with someone as secretive as not to tell you the profit which you're supposed to be getting a share of.

I'm unclear about your proposed role. Would you be repairing laptops, doing business development, website work, all of these, or what?

Given that the market isn't saturated, why don't you set up on your own, using your skills to create the business and outsource the other tasks if necessary or desirable? Even though he's not asking you put money into the business, he's still asking you to invest a considerable amount of your time.

I sure as heck wouldn't like the idea of giving half my time (15 hrs p/w) for a 3 month period with no guarantee of any reward at the end. I don't really understand why you would consider it.

I'd tell him that you want to see the accounts and some kind of business plan and projections of where your investment of time is going to take the business. It's just not attractive to say, work for me for 3 months and I'll maybe give you something at the end of it. That's not a business deal at all.
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JustDoItForever
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PostPosted: Fri Jan 13, 2012 5:10 am    Post subject: Reply with quote

LOL, the more advice I get from people who actually know what they are talking about, yes, the more I think "WHAT THE ^&*%*& WAS I THINKING" even entertaining the idea... I guess I am also too much of a dreamer, and to do this crap while working a full time job in my field, yea, stupid.

But you know the funniest part? This is all you need to know to get a good laugh:

He says after I send in my first proposal:
"I talked to one of my business mentors (LLMMFFAAOO) and he told me I should give you access to the Google analytics to my site so you can see how many more hits it is getting and then you can project from that and the prices on the web site what the profits may be etc..."

Thank god I moved on... to a much better business deal right now, I'll post that later to get some opinions, but I am happy with this new one, with a good guy I have know for almost a decade.

Thanks guys!!!
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