Questions

A business partner I want to bring on is willing to invest more than I am at this stage in the business, but I will be more actively involved in the day to day operations. I want to give him 40% of the company and I retain 60% ownership.. Can somebody advise whether this is in normal practice and reasonable? I've never opened a business of this scale and have never brought on a partner to this capacity.

I cannot give you a "magical answer", but I can tell you what has worked for me (more on my journey here: RMentrepreneur.fyi.to/LinkedIn ). My businesses were successful (successfully exited both) for many reasons, among them making more right decisions than wrong ones, and for thinking strategically. One right decision that we made early on was to split the equity equally among myself and my 2 other co-founders. We realized that because we were going to pay the same price and had the same level of commitment, mainly forfeit college and have no social life, it was fair for each of us to have 33,33% of the company. Whatever money we had to start off with were treated as individual loans that the company would pay back proportionally when ever it was financially possible and mutually agreed upon by all. As for a partner coming at a later stage this requires a lot more than just numbers, requires wisdom to understand the psychological implications. The entrepreneurial journey is like one of those old wooden roller coaster rides but with no record of proper maintenance in years (think risks!), and the wagons are very far apart. Trust me, you and your co-founders are NOT in the same wagon. Someone has to always be going up (motivated) to rally the troops in times of despair. Happy to take your call.


Answered 3 years ago

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