Managing partners

[schenker76]

Hi everyone. Glad to have found this forum. I just founded a business and have added in a few close relatives and friends as shareholders/partners. There will be 4 of us in total. But frankly, im not sure how much of contribution in terms of finance & work i will be getting from them. This far, i have been taking care and worrying about every single aspect of the business, from business planning to admin and getting things done including paying for everything.
I have decided a share of 40% for me and 20% each for the rest. Their targets will be to bring in customers and also work on any other problems on hand. I dont want to be doing all the work and yet split the profit. I prefer to have a fair deal such that you get paid for what you work. I'm totally new to this. What is the best approach to this?
Thanks for any valuable feedback.
Schenker

[vangogh]

Welcome to the forum Schenker. Your question is common and I always start with similar advice. You want to make sure everyone involved is both contributing and being compensated fairly. Everyone should feel that way or there's a good chance one or more people will start to resent each other. That's never good, but it's worse with family and friends, because of the non-business relationship.

What I would suggest is you get together and in writing make it clear what everyone's responsibility is. Don't worry about the money just yet. First figure out what each person is supposed to be contributing. You should have a better idea of what share each person deserves based on what they're supposed to do.

That assume everyone does what they're supposed to. You can write something into the agreement that if people don't fulfill their responsibilities they don't get compensated. I'm not sure what the best way to set that up would be, but maybe you revisit the agreement every few months for a reasonable amount of time. If you own 40% and everyone else owns 20% each then you only have to convince one other person you're right, to have any vote go your way.

The main thing is to talk about what everyone will do before you decide how to split the profits. Be very detailed and make sure everyone understands their responsibility and signs something to that effect. The more you talk about this up front, the less surprises there will be for everyone.

Hope that helps.

[schenker76]

Hi, I've read some of your posts in this forum. Its good advice. I will take your advice. Really happy there is a place for newbies like me to get questions answered. Thanks so much!