business start up advice

cwrtcoed

Hi
My wife and I are currently in talks with two other partners to start up a business that we initially intended to venture ourselves three years ago, but finances and other commitments hindered our progress.
Anyhow, the other partners have come up with a revised business plan from our original and state that it will be performance related. This giving my wife a small amount of the company shares and when the work and profits increase so does her wage and bonuses. On top of this, she will be able to increase her shares ( at no extra cost) to a total of 20% and at that stage she can purchase an additional 10% for the going rate at that time, so the max shares she can have is 30%. However, I have never done a business before and we are stumped as to know if this is fair, who would we need to see about impartial advice about this, because initially the other partners offered my wife a 40% share and a wage, now their finance manager has come up with this idea ( probably more to their favour I presume), the business is to long and complicated to put it all down on here, all I need is to be pointed in the right direction. Im a bit apprehensive now to go into partnership if they are greedy in the first set up stage, I want this to be right for us all.

paddyrg

Is it fair? That's up to you to decide, to be honest. Frankly though the person who comes in with the finance will take the biggest risk and hence share. They seem to have a plan of how to incentivise her if she makes the business a profitable concern. Talk to a business advisor by all means but they cannot decide for you if it's worth the sweat equity to balance the cash equity.

cwrtcoed

Yes I can see how that is a concern for them. However, they looked at the business plan and stated that it was way overpriced and their business manager would look at it, but on our last meeting they never showed us the reduced figures for start up. My wife will already have a large income coming in after two months of starting up. this gives me rise to suspicion when they don't show us the start up figure, my wife will be hands on and available 24hrs call, she will be doing most of the work. The other partners will only be covering the first two months of start up but doing nothing else. So I don't see why she should be having only 10% of the company at first. She could build that company up to a large scale and they could sell it before she reaches 30%, so we lose out big time.

colino

In two short posts you have answered your own query. You don't trust them, so don't go in to business with them.

cwrtcoed

your correct, im looking at other options