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scottacme13
02-08-2010, 02:42 PM
Hi My name is Scott. I own a full service company for the past 10 yrs. and I do good for my self always trying to improve. I am starting school for irrigation and small engine repair. But i have a problem that i need help with. A long time friend. That nows a lot of people wants to start a business with me. He wants to start a division of my company. does any one ever tried this and how did it go. Or should i start a another company. I just worry about all the costs that i already pay for and would have to do again . Please i need help and input. Thanks.

picframer
02-08-2010, 03:23 PM
Basically the way it would work is you would form an Incorporated Company and roll all your assets into it, come up with a share capital lets say 1,000,000 shares, then you would set a share price, probably $1.00, then you need to do a valuation of your company, lets say with goodwill and contracts its $125,000, then you would receive 125,000 shares, you new partner would have to buy shares to gain ownership or you could issue him part shares as an incentive to perform, this protects you so that you are not giving, in your case 10 years away. The new company would have the ability to issue up to 875,000 shares but each time it does you need a current valuation or you need to issue each other an option agreement, these are generallt one to two year agreements saying either John or Bob can purchase equity at $1.00 per share anytime up to a specific date in the future.

This is an inventive for everyone to perform, they are called stock options, it could be in 9 months time you have some cash and if the company does well, lets say the shares are worth $1.50, you still get them for $1.00.

Steve
02-09-2010, 05:02 AM
A long time friend. That nows a lot of people wants to start a business with me. He wants to start a division of my company. does any one ever tried this and how did it go.

First off, welcome to our forum!

Can you tell me why he wants to do this with you versus just do it on his own? Or why not have him come to work for you?

Why is he focused on starting a division within your company and what do you feel about that?

scottacme13
02-10-2010, 06:18 PM
i run a full service company. He wants to start a fert company. He has no business knowledge and does not want to. I would like to have him work for me but he wants to much an hr. to start out at. I worry about the costs. and having to pay for two insureances and other things.

what do you think i should do.

Steve
02-11-2010, 09:08 AM
I think this is a recipe for a disaster, especially if he is a good friend of yours.

If he wants to start a business, fine, he should do it and you could throw him all the work you can possibly throw him. You would be a fantastic friend for helping him like that.

If he wants to start a fert company. He has no business knowledge and does not want to.

He shouldn't start one. It would be a train wreck.

If he doesn't want to learn how to run a business, he should consider being an employee.

If he wants to be YOUR employee, then he needs an hourly figure that you can work with.

What's your thoughts on this? I bet you have some gut feelings as to what you think would work or what wouldn't.