I have a business.I met someone for a completely different reason, but we got along so well and we eventually started talking about starting another business (like the one I already have,but as partners).I would consider this person to be a friend now,we get along very well and we have the same ideals.Its been about 3 months, and we've decided to open a business that can only operate on my skills (based on my profession).He will quit his job and manage the business full time, and I'll be there half-day,as I have to be at my other business.He'll be contributing about 20% of the capital.We've spoken about him getting a 25% share because I'll be doing all the intensive labour and I'll contribute most of the capital.
The problem is, and it only occured to me later just before signing an agreement,I have all the capital I need to open this business alone and I could pay someone a MUCH LESS salary to do the work he will be doing.The 20% that he's putting in,I could make up in a month and as it stands,I don't need it.The deal he is getting is like someone paying R100 to get returns of R400+ every month. I don't want to sound greedy, but this guy would be getting a heck of a deal. I'm so confused about what to do because I do not want to spoil the friendship and this is someone who I'd go into many ventures with. We've already verbally agreed to do this, but I don't think it will be fair to give someone 25% of a very profitable business, after contributing so little-and the fact that I'll be doing the hard work which will bring in the profits.How can I make this a fair partnership without ending the deal with him?
Maybe I just need another perspective on it, but I urgently need advice on this, as we have time constraints to open.
Is he or will he be contributing something that an ordinary employee would not? Remember employees call in sick, leave for various reasons and are most concerned about themselves, not the business.
If what he is doing is something any employee could do, then what you should have is an employee. If on the outer hand he brings skills and judgement that an ordinary employee does not and those skills and judgement will make a critical difference to the success of the venture, then perhaps a partnership is appropriate.
You state: "this is someone who I'd go into many ventures with" which sounds like more than "just an employee".
Perhaps what you two need to do is sit down and re-negotiate the percentages?