Business and Partnerships

Originally Posted by Gerard

Hello. I am seriously considering starting an office cleaning business

Great!

with my sister and her husband.

Bad idea.

What I would be bringing to the table initially, is the capital.

So you are an investor, not the hired help.

My sister would be bringing some experience, from when she lived in a different state -- she recently relocated. She is also a good sales person.

Some experience and relocating would say to me, no stability and unclear definition of experience level. Is your sister's experience in cleaning or sales? Have you checked her references. I'm dead serious!! Relatives have a tendency to imbleish what they know, when someone else is fronting the money.

I also noticed, that your brother-in-law brings nothing into this arrangement. He's just tagging along to see what he can get out of this. I would keep my eye on him. Things can easily turn ugly, if something is said or implied that someone may not be pulling their weight or doing their job, and your sister's husband will come to her aid before yours.

When the business is up and running the plan would be for the three of us to be paid wages, based upon how much we each actually get directly involved in the cleaning.

So who is going to do the measuring? You are the investor, you do not get wages. Now if you want to take part in the actual hands on then your investment needs to be paid back and be included in your initial business plan, and then you would share in the profits as the company grows, because as an investor you would receive more. Then their is the possiblity that your sister and her husband would buy you out, as part of the initial business plan.

The chief question I would like to throw out to the folks in this forum is how should the business profits be split. Should my sister and her husband be treated as one half of the partnership, with me as the other, having the profits being split 50/50? Or is it more equitable to spilt the profits three ways?

If you go forward with this, you should be the principle share holder. You have the greater risk. You could lose your shirt, they would lose only their jobs. You should have at least 51% control of the business. IMO you should have 100% control and hire your sister and her husband to work for you.

My question is, "If your sister has experience, then how come she is not trying to get this off the ground?"

If she is a good sales person, as you mentioned, then she should already be lining up clients. A good sales person doesn't wait for work to come to them. They go out and get it.

I really think you should not go into business with your sibling and her husband. If they are as good as they want you to believe, then let them prove themselve first, before you invest a cent in this venture.

From the Trouse
Woody Quiñones
PS. I've extended the Seeds of Wisdom offer until the end of this month. After that the offer will end.