Well at this early stage there is a great chance it wont work so the money spent could be a waste. Any idea how much that would cost/
Anymore ideas on my original question?
Remember that "free" advice is usually worth what you pay for it.
What type of return does your investor want/need/expect?
What do you think is "reasonable"? Return needs to be commensurate with risk (perceived by the investor). Since you say above that "there is a great chance it won`t work" - I`d say the risk is high. Therefore, the return should be high. Typical return objectives for high risk ventures is around 40%-50% per year - which translates into a return multiple of 5 to 8 in five years. Since most businesses can`t generate the cash needed to provide such a return - the only way to reward the investor is by selling the business or going public.
On the other end of the spectrum, an investor can get 7%-10% return with virtually ZERO risk. So you will have to be able and willing to offer a return higher than that.
So I`d say your bracket is >10% and <40% per year return on his investment.
Finally, I reiterate the previous recommendations. Get advice from professionals.
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