Hi All,
This forum is great. Glad to have a place to possibly get some unbiased opinions on my situation. Thank you in advance.
My husband and I had an idea for a business and began implementing it a few years ago. During this time, a friend of a friend got wind of what we were planning and wanted to be part of it. He had and still has no expertise in the field, my husband is the mastermind and runs the business. I knew the laws and regulations from lots of research and handled permitting and licensing. Its a highly regulated industry. We met with him multiple times and ultimately decided after much deliberation that we could start on a larger scale than originally planned with this additional person as an investor. We agreed to give him 50% of the business in return for his purchasing our larger start up equipment with the understanding that we would split the costs of installation of said equipment and build out of the space. In a short time, we realized we were in over our heads and our new partner offered to loan the business enough money to get us through to opening as long as we agreed to pay him back before anyone starts collecting from profits. After over a year, we finally get open during which time my husband quit his job to spend the hours focusing on getting open. We've been open almost a year and while the business is carrying itself, we cant produce enough product to make enough to pay back the loan and eventually pay ourselves and husband is going on 2 years with no income. We have decided to bring on another investor to expand production so we can pay back the loan and start paying husband.
Here is where I need opinions on what is normal business. Like I said, my husband runs basically every aspect of this business and is doing a terrific job. We have a great reputation and great product thanks to his hard work. I work in a different field but handle most of the paperwork and ordering supplies for the business in my 'spare time' and our partner is retired and does virtually nothing to contribute. I think that once we start making enough money to pay back loan, my husband should get paid a salary since he is the only one of the owners actually working in the business. Whatever is left gets split between the partners. Partner thinks taking a draw against our 50% of the profits (soon to be 45% due to bringing on new investor) to pay husband is the fair thing to do. I understand the concept of sweat equity, we've put 2 years in already, but is it fair to expect my husband to work there 60+ hours a week and not get paid a dime more than our partner while our partner is no longer contributing?
This is our first business and I just want to be fair for both parties involved. Thanks again for reading and your opinions.
Biznewbie
This forum is great. Glad to have a place to possibly get some unbiased opinions on my situation. Thank you in advance.
My husband and I had an idea for a business and began implementing it a few years ago. During this time, a friend of a friend got wind of what we were planning and wanted to be part of it. He had and still has no expertise in the field, my husband is the mastermind and runs the business. I knew the laws and regulations from lots of research and handled permitting and licensing. Its a highly regulated industry. We met with him multiple times and ultimately decided after much deliberation that we could start on a larger scale than originally planned with this additional person as an investor. We agreed to give him 50% of the business in return for his purchasing our larger start up equipment with the understanding that we would split the costs of installation of said equipment and build out of the space. In a short time, we realized we were in over our heads and our new partner offered to loan the business enough money to get us through to opening as long as we agreed to pay him back before anyone starts collecting from profits. After over a year, we finally get open during which time my husband quit his job to spend the hours focusing on getting open. We've been open almost a year and while the business is carrying itself, we cant produce enough product to make enough to pay back the loan and eventually pay ourselves and husband is going on 2 years with no income. We have decided to bring on another investor to expand production so we can pay back the loan and start paying husband.
Here is where I need opinions on what is normal business. Like I said, my husband runs basically every aspect of this business and is doing a terrific job. We have a great reputation and great product thanks to his hard work. I work in a different field but handle most of the paperwork and ordering supplies for the business in my 'spare time' and our partner is retired and does virtually nothing to contribute. I think that once we start making enough money to pay back loan, my husband should get paid a salary since he is the only one of the owners actually working in the business. Whatever is left gets split between the partners. Partner thinks taking a draw against our 50% of the profits (soon to be 45% due to bringing on new investor) to pay husband is the fair thing to do. I understand the concept of sweat equity, we've put 2 years in already, but is it fair to expect my husband to work there 60+ hours a week and not get paid a dime more than our partner while our partner is no longer contributing?
This is our first business and I just want to be fair for both parties involved. Thanks again for reading and your opinions.
Biznewbie
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