New business structure set up advice

[Namdlo33]

Hi I’m setting up a new business in estate agency - just want some advice on how to structure it best
My investor has exsisting letting business I will go into this office set up and run sales - no office rent charged just our expenses and then they will pass any leads from landlords looking to sell.
He wants 45% share is this reasonable
I presume I should also include a wage as well as 55% share of profits as I will Be the one working and running the sales business
Any advice opinions etc would be most helpful
Thank you

 

[STDFR33]

Have you crunched the numbers? What do you need to make a reasonable wage? Is it feasible?What happens when you outgrow the office space?

 

[Namdlo33]

Yes it works I think anyway to make a reasonable wage, I’m not putting any money in but there is not huge amount to pay out for as most of office is set up but cost of additional
Computers software etc covered - new website and office refurb covered by them but then this benefits the exsisting business doesn’t it
My concern I guess is I don’t want to feel it’s too much if I’m doing all the actual work , also what happens when the leads from them dwindle down ?

 

[STDFR33]

When the leafs dwindle they don’t lose much.

When the leads increase and become steady, you’re chucked out as you are surplus to requirements.

 

[Namdlo33]

Ok so what would you suggest ?
I think I still have value as I will be running it and they can’t don’t know how to and have their side to look after

Guess could employ someone but I still hold shares
Thank you for your input and comments this is helpful

 

[Mr D]

Ok so what would you suggest ?
I think I still have value as I will be running it and they can’t don’t know how to and have their side to look after

Guess could employ someone but I still hold shares
Thank you for your input and comments this is helpful

Do not bet on them not knowing how.

It sounds like a good deal. For the investor.
A good deal for you, harder to quantify.

Holding shares is not the be all and end all.

And while you are talking now, get a shareholders agreement done - the forums are littered with businesses where the shareholders disagree or want to split and no agreement possible.

 

[Namdlo33]

Yep I’m on the shareholders agreement already have that in hand
Ref the deal as I suspected it’s weighted in the investors favour as you say -
Wanted to understand if I was being realistic - aside from just negotiating a larger share for myself any ideas on what else to negotiate for

 

[Namdlo33]

A salary for me is a must yes ?

 

[Mark T Jones]

On the face of it, it’s all a bit too easy come easy go.

What are your personal goals and aspirations for this business? What commitment are you making?

Yes, shareholders agreement is a must, but don’t just buy one, sit down and thrash it out with your partner- this is a fantastic way to understand and manage expectations

Broadly speaking, as the director running the business you have responsibilities and can reasonably expect a wage for doing the job and taking those responsibilities

As a shareholder you have rights, including the right to a proportionate dividend in line with your dividend policy

 

[Namdlo33]

Thank you Mark- please can you explain further what you mean but your first paragraph - easy come easy go

 

[Mark T Jones]

Thank you Mark- please can you explain further what you mean but your first paragraph - easy come easy go

No. Work it out

Think about what each party expects to put in and get out of this deal

 

[tony84]

If the deal works for both of you, fine. How well do you trust the person? Why have they not set up the estate agency side themselves? It would not take a lot for them to do it.

But just think longer term. In the short term, you save some money on rent etc.
In the long run, you are losing 45% of your business. If they want to re-jig the office and put you out of the way and take your properties out of the window to force your hand, they can do. They can start to charge the business rent on a whim.

Although you own 55%, they can close your business down in minutes.
Do not use their phone numbers - you can buy a number for a tenner a week to redirect to any number you like. If they kick you out, you can redirect it to your mobile.
Do not use their server for your website - they can stop your access if you fall out.
Do not use their computers - they can stop your access to your back office system (unless it is cloud software).

Basically, have everything in a way where if they play silly games you can pack up a box and open up on your own - but you still have to then pay 45% to the other director of any profits.