How To Decide Partnership Percentage Between My Partner And Me.

[littleanimo]

Hello ,
I recently started a architectural visualization company in india. I am the guy who is going to bare major funding to the company requirements and also i am the guy who brings projects for the company.
And one of my friend is also there as a partner & as a Production Manager in the company. He also funds the company but it is very less as compare to me(around 25-30%). And he don't have any contacts to bring projects for the company.
All he knows is he can manage the company ( As i am not available at company to take care of work and employees) and some times he also helps to complete the work along with the employees.
Because i wanted him as a partner in my company is he is trusted person to manage the work and employees and he also have the work knowledge so it's easy to understand the project requirements.
Now we are planning to register the company. So somebody please help me how to decide the partnership percentage in the company between my friend and Me.

Thanks in advance for your valuable suggestions....

[nealrm]

The ownership split should mirror the investment split. Your friend should receive a salary that is comparable or above similar wages in your area. Since you will basically be a salesmen, you should receive a salary based on commissions of the work you bring in. That salary should be comparable to other salesmen selling similar services in your area. Both of your salaries would be removed before total profits are determined. After all salaries and cost are removed include amounts to be reinvested into the company, the remaining amount can be split according to investment.

[vangogh]

Only you (and your partner) can really decide what's fair to both of you. You're investing most of the capital and you're bringing in the initial customers. He's investing something and will also be running the day to day. It sounds like you're putting in more initial and so deserve a larger share, but he is going to be providing a valuable part in the business, since he'll be the one running the operation. Maybe a 60/40 or 65/35 split. I'm just throwing out a number, but that's what popped to mind.

Ultimately the split has to be something you both are happy with. Also consider since he's a friend that your friendship isn't worth losing.

[Michael Fied]

If your wanting a "Partnership" you always want to go 50/50. As both of you will have equal say over the situation or when a problem rises. If one has 60% and another 40% the owner with 60% has the last say over the company legally as he owns more of it. Or what you can do is form a C-Corporation and form a business plan. With monthly stages each month you get a strict plan on what each person has to do and get done SUCCESSFULLY that month if they do it successfully then they will get say 10% a month for 5 months each. At this point BOTH of you have EARNED the rights to the company and it's actually worth something. If you or your partner slacks they will loos percentages. Now keep you mind you get written contacts for both sides to "play it safe". You can head over to RocketLaywer.com and they can assist you with this.

Honestly in my opinion it's always a bad idea to have a "Partner" as when one of you disagrees with something there will be a huge argument. Even over little things. Best of luck on your venture. If you need any assistance or help in marketing do not hesitate to send me a private message.

- Michael Fied

[MyITGuy]

If your wanting a "Partnership" you always want to go 50/50. As both of you will have equal say over the situation or when a problem rises. If one has 60% and another 40% the owner with 60% has the last say over the company legally as he owns more of it.

You absolutely never want an even 50/50 split as it will cause major business decisions to never be made. Partnerships are there for a reason, and should be at percentages that are equal to the amount of investment (Funds, Time, Inventory, Property or etc) that is necessary.


Or what you can do is form a C-Corporation and form a business plan. With monthly stages each month you get a strict plan on what each person has to do and get done SUCCESSFULLY that month if they do it successfully then they will get say 10% a month for 5 months each. At this point BOTH of you have EARNED the rights to the company and it's actually worth something. If you or your partner slacks they will loos percentages. Now keep you mind you get written contacts for both sides to "play it safe". You can head over to RocketLaywer.com and they can assist you with this.
I have no idea what your trying to communicate here? As an owner of a corporation you receive a percentage of shares, and no matter what the owners do, the ownership in shares would not fluctuate (Sounds similar to a partnership doesn't it...)

[billbenson]

You absolutely never want an even 50/50 split as it will cause major business decisions to never be made. Partnerships are there for a reason, and should be at percentages that are equal to the amount of investment (Funds, Time, Inventory, Property or etc) that is necessary.

I completely agree with Jeff here. 50/50 is an equation for disaster.

The way I'm set up with my partner is he makes more money than I do. I also own the web site and have control of the online marketing. He doesn't know anything about web marketing anyway.

He can't leave and make better money. If he leaves, I still have the business because I have the web stuff.

Its really a win win thing because I'm not screwing him in any way because he makes more money and I own the marketing 'heart' of the business. He can't get pissed and leave because I provide the leads that keep us on the phone every day; and I don't want him to leave because he is helping growing the company.

Set it up so it's a win win for everybody with protection and there is no problem.

[Lee Simon]

Hi,
Two things are critical. First, be sure to tell in your partnership agreement who is responsible for a task and who is accountable for that task. They are not the same. Make a list of all the tasks in your business. Secondly, the most important part of any partnership agreement, other than the split percentages, is to tell what happens if and when the partnership ends. This can happen from death of a partner, leaving the business, or some other reason. If it ends, you have to start over, since the business is no longer in business when a partnership ends.

[BNB]

Partnerships rarely work out. The only partner I have doesn't do any work, has no accountability, is demanding, and has never invested a dime into the business, yet he takes a 1/3. He's my Uncle Sam, so I deal with it.

[vangogh]

Partnerships rarely work out.

I think it's more that people aren't very good at choosing a partner. Just in observing people and who they decide to go into business with it seems they choose for any number of reasons, except those that help determine whether or not the partners can complement each others skills and knowledge. People choose partners because they're friends or relatives. Unfortunately I think they fail to consider if the combination adds something to the business.

There are many examples of partnerships that worked out well. Apple, Google, and Microsoft are 3 easy examples that all started as partnerships.