This is my first post, so here's a little back story on my ordeal. I have a full time job (independent contractor, my own LLC) where I make better than average money for a 27 year old in the hunting and adventure industry (six figures). About 4 years ago, I started a side business/company, it was a small clothing line. I went after it relatively hard in my spare time for about a year, then my wife got pregnant, and we had our son ... I soon ran out of time to do anything with my small side business, so it went on the back burner and I continued to focus on my full time job because that is what pays the bills.
Last year, a friend of mine who had been interested in the company approached me about taking it over. Keep in mind, I have not done anything with this idea for the last two or so years. My friend, his wife, and his father in law asked to take over the business, and essentially make me a silent partner, I retained 10% of the company, I no longer had to do any work, and we had an agreement that I would no longer have to put up capital unless I chose too. If they do well, I get a check every year, if they don't do well, I'm in the exact same spot I was in before with a business that I was not planning on moving forward anytime in the near future.
They are getting closer to the launch in April, they have sold some merchandise, and have more merchandise ordered or being designed. My friend who is running the company now, is looking for more capital to pay for orders and set up future orders, he is expecting it to sell well. He approached me about investing more into the company.
I offered him three options: 1) The more money I invest, the more my percentage of ownership goes up 2) I make a set investment, and receive a portion of the profit for each piece of merchandise sold until I am paid back in full 3) Supply a loan to the company and have a set date where I will need to be paid back in full, if paid back in full, I will allow it to be a 0% interest loan (probably not a great business move for me, but I'm not looking to make money, just help), if it is not paid back in full by the agreed upon date, I will then charge a low interest rate (2.5% - 5%).
He has not replied yet, this was just sent over about an hour ago, so I'm sure he is weighing his options right now.
Here's the questions ... Are all of those options realistic/fair? Does anyone on this forum have any other advice?
Thanks.
Last year, a friend of mine who had been interested in the company approached me about taking it over. Keep in mind, I have not done anything with this idea for the last two or so years. My friend, his wife, and his father in law asked to take over the business, and essentially make me a silent partner, I retained 10% of the company, I no longer had to do any work, and we had an agreement that I would no longer have to put up capital unless I chose too. If they do well, I get a check every year, if they don't do well, I'm in the exact same spot I was in before with a business that I was not planning on moving forward anytime in the near future.
They are getting closer to the launch in April, they have sold some merchandise, and have more merchandise ordered or being designed. My friend who is running the company now, is looking for more capital to pay for orders and set up future orders, he is expecting it to sell well. He approached me about investing more into the company.
I offered him three options: 1) The more money I invest, the more my percentage of ownership goes up 2) I make a set investment, and receive a portion of the profit for each piece of merchandise sold until I am paid back in full 3) Supply a loan to the company and have a set date where I will need to be paid back in full, if paid back in full, I will allow it to be a 0% interest loan (probably not a great business move for me, but I'm not looking to make money, just help), if it is not paid back in full by the agreed upon date, I will then charge a low interest rate (2.5% - 5%).
He has not replied yet, this was just sent over about an hour ago, so I'm sure he is weighing his options right now.
Here's the questions ... Are all of those options realistic/fair? Does anyone on this forum have any other advice?
Thanks.
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