Im starting an online business over the next month that will require about $4000 in initial costs. We will be selling products from local businesses.

I have all of the business ideas and structure/plan layed out. I have put together all of the functuionality and am having the website built with all of the features etc. I want a partner for this venture and have talked to my brother about coming on.

Assumuing he comes into the daily operations and shares the work with me as far as advertising and costs and legwork. What is fair to offer him as a stake in the company.

I want to remain in control, having the decisions fall on me ultimately. He will assume the initial costs 50/50 with me.

Thoughts?

 

Originally Posted by Zunga

Im starting an online business over the next month that will require about $4000 in initial costs. We will be selling products from local businesses.

I have all of the business ideas and structure/plan layed out. I have put together all of the functuionality and am having the website built with all of the features etc. I want a partner for this venture and have talked to my brother about coming on.

Assumuing he comes into the daily operations and shares the work with me as far as advertising and costs and legwork. What is fair to offer him as a stake in the company.

I want to remain in control, having the decisions fall on me ultimately. He will assume the initial costs 50/50 with me.

Thoughts?

He's putting up half the money and doing half the work so anything short of 50/50 wouldn't make sense for him. Since you want control I think 51/49 you is about right.

without writing a bunch of non-sense, Profit Share = 50/50 Company Ownership = 60/40 your way

 

Originally Posted by TC_Clueless

you always strike out your first time at bat, so I say you should just cut your losses on this one and move on to your next idea.

Story of your life i guess. Thanks for the support....

I was commenting on your statement that since his brother is putting up half the money and doing half the work he is simply entitled a 49% stake. Completely forgetting his idea, which I did, why should his brother get 49%? There's no equity for his idea/trademark/LLC formation?

Who said anything about VC's?

Quick jump to conclusions there dude.

This is as simple as possible.

I think the OP wants more value becasue it's his idea and sweat that will lead to the opening of the business. In theory you should have a bigger stake. But irl it really doesn't work that way; unless you also have the money, or a commitment/contract of some monetary value.

 

Originally Posted by tkeat1653

I was commenting on your statement that since his brother is putting up half the money and doing half the work he is simply entitled a 49% stake. Completely forgetting his idea, which I did, why should his brother get 49%? There's no equity for his idea/trademark/LLC formation?

Who said anything about VC's?

Quick jump to conclusions there dude.

Who mentioned anything about VCs? He has a venture and his brother has capital he needs. What exactly is it if not a venture capital transaction?

He said he and his brother would be splitting the startup costs which covers the LLC formation, trademark, web design, etc...

There is ZERO equity for having the idea. All the idea gets you, if it's a good one, is someone to listen to it and invest their time and money.

Look at it from his brother's side. You want me to put up half the money and do half the work for 40% of the profit? I understand you had a great idea. That's why I'm investing my time and money with you.

We were looking at 55%/45%. I just wanted others opinions as i want to be fair. There is a value on intillectual property, although not high. I think were at a decent ground. I like the 50/50% profit sharing and my 55/45% ownership.

I suggest setting an hourly wage that is paid out before sharing the rest of the profits. That way there will be less bitching when one of you end up doing 90% of the work while the other one smokes weed and plays video games all day.

 

Originally Posted by Scha

I suggest setting an hourly wage that is paid out before sharing the rest of the profits. That way there will be less bitching when one of you end up doing 90% of the work while the other one smokes weed and plays video games all day.

Wait... why else own a business? I gest, I gest.

why not borrow 4k?


why would you share half your profits for 4k?

 

Originally Posted by Unforseen

why not borrow 4k?


why would you share half your profits for 4k?

+1