Forums: Discussions for entrepreneurs and small business.

Ok...so my question is : If you have two partners,both are supposed to split startup costs, but one does not have the funds to do soand one does all of the investing for the startup costs, what is a fair way of splitting profits?  What is the best way for the partner that invested to recoupe startup funds back quickly? Am in the process of opening a new dance studio and am also interested in finding out about other ways to obtain startup capital....

Dear bmoresalsa,

The Fair way is pretty much what both parties can /will agree upon.

Things that I would take into consideration include:

1. Are both partners contributing equally on other factors - such as time and experience

2. Are both or either of the partners receiving pay for the hours that they work in the business?

As to the partner recouping their investment - that would depend upon the performance of the business and it's future capital needs.

If you want to discuss your specific situation, feel free to contact me directly.

A fair way of splitting profits may be for the individual who funded the company by themselves to get all profits until their investment is fully paid back. But that's just my opinion.

Or the individual who didn't have the money to pay a percentage of his 50-50 profit to the investor, until the their start up capital is back in their bank account.

Simple question.

Discuss with your Partner about splitting and tell him the whole situation. If he agree with you, it's OK. If Not, try to resolve the issue politely and Get out from the partnership before you get into more trouble.

Well in any partnership, its completely dependant on what the partners think is a fair share. I know partnerships where one partner did all the investing but then the other partner went ahead and got all the new clients hence the profits were shared equally. So you have to determine the share depending upon your situation, who does more of the work, who is responsible for what role etc.

 I agree with what alirkhan said. To start the business right, talk every detail of the business proposals, start up costs, and everything that is needed to be done for the business to grow.

I would say that it totally depends on the agreement made between those partners, if one is investing money and the other is putting labour then it would be a 50-50 partnership, or else can be discussed according to the present situation.

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