How do you split ownership if you are putting up a new business and there will be two partners/owners.
Type of Business: Fashion Accessories
Partner A: No Knowledge of the business but has the money.
Puts in all the money: rent, salary, additional inventory etc.
a.Helps in securing vendors from China and will travel as needed.
b.Helps overseeing the operation.
Partner B: Only an industrial partner. Has the full knowledge of the business, has a list of at least 500 buying customers and will set up the business but no monetary contribution except maybe
some inventory of the products (certain lines only)
a.General Manger overseeing all aspect of the business mainly on sales and marketing:
- Set up all about sales and marketing aspect
- set up the showroom
- set up logistics
b. Gold mine of 500 buying customers
c. Has the lease for a very strategic showroom- where all international buyers go to buy
d. Will handle trade shows and road shows
Initially Partner A offers Partner B 15% profit sharing on net income plus salary.
But partner A wants to register the business solely under his name.
Questions:
1.0 What should be the fair split for profit sharing and ownership of the business?
2.0 What should be the salary of Partner B say hourly, weekly or monthly?
3.0 How should partner B be protected that after the whole thing is set up and running that
he will still be part of the business.
4.0 Partner B wants to get an initial fee for the customers list and management fee for setting up the business from partner A.
Is this reasonable as way of compensating partner B for his initial start up effort ( will take a lot of time and effort).
If yes how much would that be? If not why you think?
5.0 How are both partners be protected?
6.0 Partner B believe to be a limited partner and must be part during incorporation or setting of partnership instead of just profit sharing.
7.0 Is 15% profit sharing good enough considering that its partner b who will really run the show and all the business know how will come from him?
8.0 What should be the ideal and fairest set up for both?
Your thoughts and input will be greatly appreciated.
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