Starting a new business
unni
Dear Sir/Madam,
I am planning to start a Vehicle Dealership business with some
partners. What kind of contract should I draw up given the following:
1. some of the partners are investing only, some are not investing but
active, some are investing and active.
2. I own the land and have the major portion of the investment, but
will not be active full time.
3. We will need to take loan from the bank.
Thanking you.
Yours truly,
Unni.
Wayne Lundberg
"unni" <mun...@hotmail.com> wrote in message
news:cu1kh...@enews4.newsguy.com...
(Founders formula)
Establish a one-million shares paper corporation and issue stock according
to the following:
50% set aside for future collateral and profits to be reinvested
25% for future sale to limited number of investors
12% to be issued to the founder immediately
12% to be issued as follows:
X shares per hour of consulting, legal, accounting
X shares per hour to any contributor in sales, machining, design
One share per Dollar of whatever spent by a contributor
....
The formula I teach, and is right out of the Entrepreneurial Manual, is to
issue, say 1 million shares of stock. Hold 500,000 in the company safe for
future use when cash is needed and the bank will use some of these shares as
collateral. Set 250,000 shares aside for sale to people who want to simply
invest, but not participate in management or any other way. The remaining
250,000 shares are to be split with you keeping 125,000 and setting the
other 125,000 aside to distribute according to the plan. You can use a part
of those shares to pay for consulting, design, engineering, accounting,
legal, public relations and so on by getting people like me to work for you
at some established and equitable rate agreeable by all, in stock. Say one
share for one hour of consulting. You will never lose control in that you
will always be in control of the 500,000 shares plus your own.
At year end, you make distribution of net profits according to the
percentages of issued stock. 50% will be reinvested in the company by
default, 1/8th will go into your pocket by default, and the rest distributed
according to outstanding shares. This puts each stockholder in a position
which forces us all to think of our work as contributing to the company and
receiving a fair return on our investment in time and money.
I recommend you think this through, then call a meeting where you will
explain the cash flow of the company, and that even by selling the cars, and
the support supplies at huge apparent margins, you are
barely covering costs. But that by reducing scrap, rework, lost time, doing
work on the job that is not creating sales revenue, that a fair and
equitable return on their time will be a reality. Then issue your key people
promissory stock notes to reflect the formula. Now they will feel more like
stockholders and less like employees. Emphasize that once a share of stock
is held, that profits from the business will be split year in and year out,
not only to the employees today, but for their families forever in the
future and that it will be much, much more if the company grows in such a
way that it can be sold and everybody will either cash-out, or exchange
their shares for the new company.
Then issue a weekly summary of throughput. Throughput as I have used it in
every operation I have run, is a simple subtraction from gross sales of all
expenses broken down into overhead, direct labor and estimated materials
costs. It's easy to set up and it can be posted for all your stockholders so
they can take immediate action to make course corrections to maximize
throughput while minimizing all other expenses and increase productivity.
>
John A. Weeks III
In article <cu1kh...@enews4.newsguy.com>,
"unni" <mun...@hotmail.com> wrote:
> I am planning to start a Vehicle Dealership business with some
> partners. What kind of contract should I draw up given the following:
>
> 1. some of the partners are investing only, some are not investing but
> active, some are investing and active.
>
> 2. I own the land and have the major portion of the investment, but
> will not be active full time.
>
> 3. We will need to take loan from the bank.
You would want something called a "partnership agreement".
That is the territory of a skilled attorney. You need to
carefully consider what happens when a partner wants out,
or is forced out due to death or divorce.
-john-
--
======================================================================
John A. Weeks III 952-432-2708 jo...@johnweeks.com
Newave Communications http://www.johnweeks.com
======================================================================