Forums: Discussions for entrepreneurs and small business.

I am setting up a restaurant with a partner. We are investing money about equally. He has restaurant experience (I do not) and he will be managing the place full time initially. I will keep my current job and work in the restaurant on the weekends and evenings only, at the beginning. My partner is asking for additional share in the company to be compensated for his experience. He is also asking for a salary to compensate for his time. What would be a good way to figure out what is fair?

have you already  formed this partnership??

That what is fair to one person is not neccessarily fair to the next.

so let me understand the situation,  

your partner wants a salary,   well he has to live, how much is the next question.

your partner wants additional share of the business,     does that mean that he wants  more ownership than you ??

IMHO  this is the way it is, 

It sounds like he wants the best of both worlds. the security of employement and the benefits of ownership.    I would never give  both away.  Now he is putting more time into the business than you  but you are compensating him for that with a % of the business.

You are better off just going out and hiring someone to operate your business.  a general manager that is.   That way you are the boss , you make the decisions and as already stated take all the financial risk and realize all the financial reward.

Just the opinion of someone who has tried the rest. business, with a partner who supposedly had the skills to operate it,  and put no money up.  It was the longest 5 years of my life.  It may have been the biggest mistake I have ever made in my life.  I`m still trying to convince myself that I learned enough to make it all worth while but I`m not sure if that is the case or not.

Good luck, because if your having doubts about it now, well,,,,    Good luck.

Michael T

We are investing money about equally.

Yup I missed that sentence, sorry . 

If your putting up the same cash ,  50-50 sounds good.

Now if he wants more for his skills whether it is a salary or a larger percentage of ownership  that is also fair, but to have both, that can be another question.

I was going some where with this but,,,  lets just go back to

That what is fair to one person is not neccessarily fair to the next.

If you think what he wants if fair, then it is fair.  it all depends how much you Need him and how much you want  this to happen.  It works on a  sliding scale,   the more you want it, the more you are going to be willing to give up to get it.   As stated earlier, your partner will need to live.  If there is pressure put on him financially to pay his bills  then it may turn into a very ugly partnership.  

Michael T

Thank you guys for your help. I have some more questions.

My partner took a position that he should be compensated for his experience and work. We discussed that he would be paid for his time. He also wants equity beyond the money he and his wife will put in. This would compensate him for his know-how that he is bringing in. My question is where could I look up and how I could determine what would be a fair compensation for both his work (salary) and his know-how (equity)? Right now at least I got an idea what to say regarding the salary. I will try to look up how much a GM would make in the area for comperable size restaurant (1300 sq-ft). Can you recommend a website or agency to contact for salary information? However, I have no idea what a fair equity portion would be. Any suggestions?

Fair is only that what you both agree upon, whether you are talking about compensation or equity,

If you think `X` is fair and he thinks  `Y` is fair, unless `X` and `Y` are the same one of you will not think it is fair.  IMHO if you don`t think that what he is asking for is fair and he doesn`t think that what you are offering if fair, then there is no fair number.

In short you have to decide the maximum you are willing to offer and if he doesn`t feel it is fair then there is no agreement.  It is going to come down to how much you want to take part within this business.  

To be fair,  if he does have expertise that has value then it is worth more.

Take me for example.  I belive I am a very good problem solver.  I believe my skills are worth $1000 an hour with a 40 hour minimum, plus 10% of the additional profits I create for you.  I even offer a money back guarantee that your business will benefit more than I will.  Is that fair?  I`m sure there is currently very few firms that feel that would be a fair deal for them.  To make things that much more challenging, I have recently changed the cost of my services to include part ownership withn the business.  I feel this offer is  fair because if a firm doesn`t offer me part ownership, I will simply start a new company and take a percentage of their market share and their profits anyway.

So fair is in the eye of the beholder.

Michael T

Pour le dire clairement, un objectif limité est de faire de la montre de rares. Mais ce n'est pas parce que le processus est plus rare et difficile unitaire, matériels unitaires plus co?teux, fastidieux à long unitaire, unitaires de créer plus de replique montre problèmes, mais l'homme, il suffit d'ajouter un montre IWC nombre à une forme limitée, le vrais fans comment la table va l'acheter?Quel genre de chef-d'oeuvre en édition limitée considérée, il me semble rien de moins que les trois points suivants:Tout d'abord, un mouvement unique. Si un mouvement dans lequel seulement une montre, même si un nombre limité de grandes, aussi longtemps que le mouvement est unique, c'est une bonne chose. Parce que le mouvement est un nouveau temps de travail, le co?t est assez élevé, donc à utiliser une forme unique de mouvement limitée, ne peut certainement pas aller mal. S'il s'agit d'un très faible quantité de mouvement de l'ancienne survivants, rassemblés dans la nouvelle édition limitée, ce nouvel arbre vieux, forme de fleur, est également digne d'éloges.Deuxièmement, le cas unique. Comme dit précédemment, si un shell avec seulement une montre sur ce point, la limite Exprimé terminé, replique de montre mettre le modèle en coquille détruits. Cette édition limitée, est montre montblanc précieux.Troisièmement, cadran unique. Comparé avec les deux premiers conception unique de composer le moindre co?t, mais si il ya d'originalité, d'idées innovantes et l'idée est assez bonne forme limitée.