Questions

How to set profit sharing percentages when both parties aren't providing equally?

I have a renovation firm and are currently working on two major projects. However, my business partner has not been providing any funds or financing in these two projects. The only thing he could do is to provide project management on one of these project. As for me, i have been funding the two projects and are handling one of these projects at the same time with him. So how are we going to split our profits among ourselves. Take note that he does not provide any funds or financing to the business which i have to carry all the expenses.

3answers

Does your business provider add value beyond money to counter balance?

Normally, you would share profits according to your ownership stake. If you aren't happy with the current ownership split, maybe you could buy some of his shares.


Answered 5 years ago

Hi.
I am a business coach and mentor and I also own a building business doing renovations and conversions.
My question to you is; What is he actually doing that benefits the business or project and what is the value of that?
I would then ask; If you were to bring in outside help to do what he is doing, what would be the cost?
Having said that I don't understand why, if you are partners, this hasn't been discussed and agreed before hand. I have seen a number of good businesses get into trouble due to lack of communication between partners.
The best advice I would give at this stage, bearing in mind I don't know any more than is in your question, is for you both to sit down together over a coffee and discuss the situation and come to an agreement that is win/win for you both.
Feel free to contact me if you wish to discuss getting further help. Regards. Rick 07415984455. I'm back at work on Tuesday if you wish to call then.


Answered 5 years ago

Both yourself and partner may need to come up with the agreed calculation method to calculate the weightage of Contributions from both of you. The basic idea is to :

1. quantify both contributions
2. convert it to percentage

so you can determine the profit sharing.


Answered 5 years ago

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