Starting a business with a partner?
I am going back and forth on how to start a business with my sister in law. We want to open a hair salon. I already own a salon and have done well, so I have no doubt that we will do well. I will be putting in the majority of the money while she will be working the most since I will still have to oversee my other business.
How can we go about dividing the profits and liabilities so that it feels fair. I have never had a partner in business so I do not know how it goes.
The space that we are looking at has all of the electrical and plumbing that we need. I already have all of the furniture needing to put in the salon (5,000dlls worth). Little things would be left like deposit on the space, getting a sign, products etc. She doesnt have a whole lot of money, but she would work seven days to get it started.
Does anyone have any suggestions on what would be a fair split for a situation like this?
- HLv 59 years agoFavorite Answer
Cash is king and you already have run a successful salon. Instead of opening up another different one, just use the same name and build it as a brand. As far as partnerships go, you're providing majority of the capital and you already have successful experience, so if you open up this other salon as part of growing the salon brand, you can remain majority owner and maybe give your sister-in-law like 10-20% of the equity. She is afterall, considered just an employee. Partnerships are tricky and maybe it'll be easier to just use your same business and give her a portion of equity or profit-share from just the 1 salon you're opening up. It will be dificult to evaluate payouts if the time arrives, but to get it up and running without needing to setup another business registration, etc. your best bet would be to build on the existing salon's brand.
Business consultants would charge you about $150 dollars per hour for the info I gave you (although they'd provide for a lot more detail), so if you need details, use a consultant or if you're satisfied with being majority owner(there has to be a majority owner in every business, 50/50 never works), then speak with your lawyer and figure out what you can do to open up the other salon using the same brand, but giving equity or profit-sharing incentive to your sister-in-law for the single salon she will be working in.