Partnership question

I want to start an online business and looking for some investors. However I have some doubts regarding the basic partnership deal with an investor.

In this company setup, I will be organizing everything which include creating strategies, sales & marketing, customer care etc. and the investor has only to pay the funds and remain quiet.

Here are my questions regarding such business practices:

1) Should the investor liable to pay the monthly expenses etc. until the company gets profitable?

2) Whats the normal profit sharing deal with an investor, can it be 50-50?

Awaiting your responses...

 

1) Investers usually invest a set amount and not per month. Its up to you to use the investment money to make it profitable.

2) normally it is for % of your profits. if its a new company big timer investers will want atleast 30-50. Check out the show dragons den on youtube and you will see what i mean

 

Your absolutely correct Thebumed. People who invest, want some money back in return in most situations. Im also trying to looking for investors for my project. Any ideas where i can find one?

 

Inc. partnership terms are strict, the shares of the company equals to the $$ invested. You should think about opening an LLC so. The terms for an LLC is very customizable and will be what you want.

 

So, we need to enter the total amount that is needed to get the business profitable as the total expense, instead of the initial expenses?

Also, can the other (working) partner get the salary since he is doing the operations?

 

The investor invests his money and the the real owner his time and effort. If you intend to take salary for your effort, I do not think investor would like this action, not until the company turns profitable.

Regards,

RightMan

 

An owner virtually never draws a salary until the company is profitable.

Also, depending on the terms, some investors get paid back first and retain a percentage of the company before the working partner starts to be able to draw a salary.

 

Alright, thanks for your valuable advise.

What about the risk factor and the investor's role in such partnerships? Should the working partner send report to the investor about how the the money has been spent? If the business is a failure, what about the money back to the investors etc.

I know that its different in every partnership business, just wanted to know the common practises.

 

That's a very good point an a brilliant show. Never heard of it before, but it is a great way to get ideas.