Is it worth ?

[southern]

lets say u have a sales guy that is capable of bringing in 15K profit per month, requested to set up a new company , with him owning 40% shares of the new company. He will not fork out a single cents innitially , a personal loan will be given to him by me to own the 40% share. the oveheads for the new company will be approx 10K/mth, which means profit before tax per year will be 5K X12mth = 60K approx. the company needs a funding of 300K to run the business which will also by from my own pocket, so if you are me, would you be interested to set up this company ?

 

[sszone]

Re: Is it worth ?

depends on your level of trust with him

 

[totoseow]

Re: Is it worth ?

i think he wants too much for bringin in 15k....u need 5 yrs to break even. excluding ur personal loan. if u r his boss now...why cant u bring in more sales than him? how much do u value urself in this. if he is a friend making this suggestion to u....and u can also bring in sales, i will value his worth at 25% max.

 

[Wh0cArEs]

Re: Is it worth ?

u must also ascertain how much your current customers are buying on the merit of your company/brand versus your sales guy's ability to sell

Bcoz I've personally seen sales pple go from hero to zero just by switching companies selling similar products. All depends on what industry you're in and how differentiated the competing pdts are.

 

[wt_know]

Re: Is it worth ?

why not just give him the 'options' to buy 40% of the company share valid for 2-3 years
at first, he could work as employee (even ceo) with salary & profit sharing
if he is worth what is claim, he could possibly own 40% of the company in less than 2-3 years?
i will never loan $$$ to a friend to start biz together. it's not that not trusting the friend. it's the principle. one must earn it and use his own money to own the company.

 

[totoseow]

Re: Is it worth ?

i mean if he is the only guy bringing value....then u better off not doing this. he runs u pok!

 

[southern]

Re: Is it worth ?

i think he wants too much for bringin in 15k....u need 5 yrs to break even. excluding ur personal loan. if u r his boss now...why cant u bring in more sales than him? how much do u value urself in this. if he is a friend making this suggestion to u....and u can also bring in sales, i will value his worth at 25% max.

he is a friend of my sales staff, seriously i do not know him well, but i know he will bring in 15K /mth at least, after having a conversation with him in person, he is only interested to be in partnership and owning 40%, he do not want to work for others anymore.

I'm running my own freight business and is doing well, hence , i'm only interested to set up a new company and not having him in my existing co. My plan was to set up a company with a paid up of 20K, as for the balance 280K to financial the business will be considered a loan to the new company. so, my liabilties is only 20K no ?

Let me have your thoughts, thank

 

[southern]

Re: Is it worth ?

why not just give him the 'options' to buy 40% of the company share valid for 2-3 years
at first, he could work as employee (even ceo) with salary & profit sharing
if he is worth what is claim, he could possibly own 40% of the company in less than 2-3 years?
i will never loan $$$ to a friend to start biz together. it's not that not trusting the friend. it's the principle. one must earn it and use his own money to own the company.

yes, i have thought of that before , but i guess he might not want this offer. Anyway, will try to talk to him again

 

[southern]

Re: Is it worth ?

i mean if he is the only guy bringing value....then u better off not doing this. he runs u pok!

that makes more sense to give him some share in the company , no ?

 

[kenntona]

Re: Is it worth ?

I beg to differ in the ways of analysis.

Your issue should not be focused on HIM in the picture. Ask yourself, without him, is this new business viable? Easy litmus test.... compare the new venture's ROI and ROE (on your 60% stake) on a conservative scale (w/o factoring his $15K contribution), can it match or exceed your current business's ROI/ROE?

If the answer is NO, then you could be putting your investable funds to use in this guy's involvement, rather than the intrinsic worth of the business. Putting good money in not-so-good business is a no-no.

If the answer is YES, then it could be worth a second look, but not because of his contributions. The decision is based strictly on the earning potential of the business, NOT the earning potential of a salesperson.

 

[southern]

Re: Is it worth ?

Ken,

Your angmoh too chim, can use simple term, haha, thanks

 

[kenntona]

Re: Is it worth ?

Dun count his involvement in first ..... ask yourself - if you were to open a restaurant, will the reason be - I have ONE good cook ? Or, this F&B biz can make $$$ ? The answer has to be the latter.

So strip out his $15K contribution in the calculation.

Now, without him, how much can this business make? Every dollar you put in, how much in % will you nett ? 30 cents? 35? Every dollar you own in this company (not 100%, now 60%), how much would you make? 25 cents?

What's your current's biz earning you? 50%? Then it makes no sense to venture out. If your current biz is earning 20% and the new venture (w/o him) is projected to earn 25% or 30%, then it makes sense to jump into the new venture.

This method of projection factors in the worst case scenario of him "screwing" you and leave with all the contacts.

 

[Terry]

Re: Is it worth ?

i bo tak chek...i not chim one...

but my belief is if two partners , one sells expertise , one invest cash..

usually will turn sour...

money is king..... shareholders needs to fork out cash no matter what big or small ... imho

 

[wt_know]

Re: Is it worth ?

yup ... no money no talk.
just like buddy buddy open workshop, zhi char, etc ... one put $, one put hardwork. at the end sure quarrel because one says if not because of his money, things will not work. another one says if not because of his expertise and hardwork, with the $ also no use.

money is king..... shareholders needs to fork out cash no matter what big or small ... imho

 

[hellboyII]

Re: Is it worth ?

he is a friend of my sales staff, seriously i do not know him well, but i know he will bring in 15K /mth at least, after having a conversation with him in person, he is only interested to be in partnership and owning 40%, he do not want to work for others anymore.

I'm running my own freight business and is doing well, hence , i'm only interested to set up a new company and not having him in my existing co. My plan was to set up a company with a paid up of 20K, as for the balance 280K to financial the business will be considered a loan to the new company. so, my liabilties is only 20K no ?

Let me have your thoughts, thank

hi bro,
im also running my own freight business, my advised is a firm 100% chop + gauranteed NO.
i have encounter this type of deal before and i had seen too much trouble in it.
Do note the guy when in trouble with shipment can just go and hide. for freight business u should know also that some problem or claim dont come fast it might be in 2 or 6months later.

and when come to money wise sooner or later he will jump ship again. also some sales guy can say he earn a lot but in the end nothing come.

 

[southern]

Re: Is it worth ?

Thanks guys, the deal is off.

 

[totoseow]

Re: Is it worth ?

hooray! 1 less competitor in the mkt!