I am an engineer with no business background except for one engineering economics class, one accounting class, and one finances class. I am new to this forum. I read a few of the threads regarding partnerships and profit sharing but have not found the answers to some of my questions. So here is my situation:
About 4 months ago, 9 engineers, including myself, decided to start an engineering group. None of us have any business experience. The purpose of the group is to use our engineering expertise to implement sustainable ideas in the Caribbean where we all grew up. The group needs to generate profit/income as well in the process. We all live in different states in the US (NY, NJ, KY, MD). Keep in mind that we are all between 20 and 30 years old so some of us are still in school, others are married with kids. So we have different lifestyles, priorities, and availability.
We decided upfront that financial investment should be equal. Since we were unsure what projects we would work on and how much money would be required, each member agreed to put in $20 month in a common bank account. Not much but so far we have about $1000, which could pay for some required fees down the road.
Now that we are actually trying to move forward with a project, things don’t seem as simple as we anticipated. We have decided to build a small utility vehicle and if successful, produce more. Initial investment (needed now) for just prototyping would be $25k to $40k. Then if we are successful, 2 years from now, another $50k to $100k would need to be invested to establish a small machine shop capable of producing a few vehicles a year. The machine shop would fabricate other things too for cash flow.
Some group members are also doing research on renewable energy and technology. We do not want to focus on only one project in case one does not pan out but also just because not everyone is into building a vehicle. We are not all mechanical engineers after all.
Technically, we might not see any positive cash flow until 2018 from the utility vehicle project. Some cash flow may come from the other projects we will be working on between now and 2018.
Here are my questions:
1) How do we account for the difference in number of hours (labor) being invested between now and 2018? Some of us can put in 35 hrs a week now while others can only put in 5. We want it to be fair.
2) What deal can we work out with third party sponsors/partners (equity/profit %)? Because none of us can invest $40k now, we may need to look for sponsors or other partners that can either bring in some business experience and/or the cash.
3) When do we get an accountant and/or lawyer involved?
4) When do we officially create an LLC or other type of company?
5) Would setting the group up as a “non-for-profit organization” an option?
6) Do we register in the US and/or in the Caribbean?
Your input would be much appreciated. The design of the vehicle is practically completed. It is time to look for the founding source and start fabrication.
About 4 months ago, 9 engineers, including myself, decided to start an engineering group. None of us have any business experience. The purpose of the group is to use our engineering expertise to implement sustainable ideas in the Caribbean where we all grew up. The group needs to generate profit/income as well in the process. We all live in different states in the US (NY, NJ, KY, MD). Keep in mind that we are all between 20 and 30 years old so some of us are still in school, others are married with kids. So we have different lifestyles, priorities, and availability.
We decided upfront that financial investment should be equal. Since we were unsure what projects we would work on and how much money would be required, each member agreed to put in $20 month in a common bank account. Not much but so far we have about $1000, which could pay for some required fees down the road.
Now that we are actually trying to move forward with a project, things don’t seem as simple as we anticipated. We have decided to build a small utility vehicle and if successful, produce more. Initial investment (needed now) for just prototyping would be $25k to $40k. Then if we are successful, 2 years from now, another $50k to $100k would need to be invested to establish a small machine shop capable of producing a few vehicles a year. The machine shop would fabricate other things too for cash flow.
Some group members are also doing research on renewable energy and technology. We do not want to focus on only one project in case one does not pan out but also just because not everyone is into building a vehicle. We are not all mechanical engineers after all.
Technically, we might not see any positive cash flow until 2018 from the utility vehicle project. Some cash flow may come from the other projects we will be working on between now and 2018.
Here are my questions:
1) How do we account for the difference in number of hours (labor) being invested between now and 2018? Some of us can put in 35 hrs a week now while others can only put in 5. We want it to be fair.
2) What deal can we work out with third party sponsors/partners (equity/profit %)? Because none of us can invest $40k now, we may need to look for sponsors or other partners that can either bring in some business experience and/or the cash.
3) When do we get an accountant and/or lawyer involved?
4) When do we officially create an LLC or other type of company?
5) Would setting the group up as a “non-for-profit organization” an option?
6) Do we register in the US and/or in the Caribbean?
Your input would be much appreciated. The design of the vehicle is practically completed. It is time to look for the founding source and start fabrication.
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