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#169268 - 09/30/07 02:11 PM New business sharing profits & other expenses help
Trick440 Offline
Member

Registered: 08/15/05
Posts: 248
Loc: Waterford, MI, USA
I'm trying to break down a game plan for a new business.

I have the company, license and insurance.

Another electrician has the cleints and leads. We are trying to create a mutually benifitual relationship.

The 2 problems I am having issues with are...

This company is new so we need to put money into the company for trucks, tools, rentals, eventually buying lifts trenchers, etc.

The other is Sales commission, he has most the leads and sales.

Sales commission I was thinking 20% of profit.

Money back into the company I was thinking 30% until the yearly estimated overhead is met, then 10% thereafter.

So what do you guys think of those percentages?

Then I have the total profit after taxes. I need ideas on what to do with this.

First let me say I was thinking, we would pay ourselfs a specific hourly rate. So me and this guy would be paid hourly. If we do the work, we may have employees do the work.

So back to the total profit after taxes, payroll and expenses. I wouldn't mind sharing this with the guy, but I need to take out for me being the master, and company owner. Which I have not taken into account, besides moneys put back into the company.

Do you think I should share this money with the guy?

What percentage would be fair for me holding the license and company.

Like I said I wouldn't mind sharing with this guy, he is getting the leads.

Yaaaa, sooo... any opinions on this. Hope what I wrote is making sense., thanks.



Edited by Trick440 (09/30/07 02:13 PM)
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#169271 - 09/30/07 03:44 PM Re: New business sharing profits & other expenses help [Re: Trick440]
LK Offline

Member

Registered: 01/21/03
Posts: 1721
Loc: New Jersey
"Another electrician has the cleints and leads"

How does he have cleints, if he is not licensed to conduct business?

Leads are not signed contracts, their dollar value is hard to figure.

All i can see comming from this arrangnent is big troblems down the road.

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#169272 - 09/30/07 04:00 PM Re: New business sharing profits & other expenses help [Re: LK]
Trick440 Offline
Member

Registered: 08/15/05
Posts: 248
Loc: Waterford, MI, USA
This is why I would like ideas on a plan.

I think problems could be eliminated with a plan. Basically he will be doing sales. Along with the electrical work.

He has clients from working with another company, which is not working out. I'm not sure if he does what he does now without permits or off the previous company.

I'm thinking the bottom line profits should be mine, the sales commision should be larger than 20%.

Ya thats gotta be the way.... I was making it to complicated. Basically theres an hourly rate, and commision on the profit of sales.



Edited by Trick440 (09/30/07 04:03 PM)
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#169277 - 09/30/07 05:34 PM Re: New business sharing profits & other expenses help [Re: Trick440]
sparky 134 Offline
Member

Registered: 09/04/04
Posts: 92
Loc: Joliet, Il, USA
If he is going to provide the leads and do some of the electrical work then wouldn't he be entitled to some of the profit ?

You are laying claim to the profits because (I assume) you will be performing the actual work along with your partner. If so, he should be entitled to some of the profit.

My suggestion (if you insist on having a partnership) is that you both do your respective jobs (him sales, you installation) and at years end see how the company is performing. You may be surprised at year's end. At this point if you want to take a draw from the company it should be equal.

When I went out on my own I had a previous coworker just chomping at the bit to become partners with me. I decided I valued our friendship more. It's been 3 years and I am VERY glad I stayed single.

Just my two cents......

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#169280 - 09/30/07 06:08 PM Re: New business sharing profits & other expenses help [Re: Trick440]
Trick440 Offline
Member

Registered: 08/15/05
Posts: 248
Loc: Waterford, MI, USA
Well after crunching some more number this is what I came up with.

If I pay him 30% commision of the actual profit (after all expenses), then I will make 36% of the actual profit (after all expenses). So I would make 36% for doing nothing but owning the business. Sounds like it could be a bit too much. What do you think? What % do you think would be fair in this situation.

This is bottom line every expense paid, employees, insurance, stc. the company needing to make 50,000a yr. minimum. Any profit over $50k, there will be an extra 10%.. which can be turned into a bonus, or whatever.


Edited by Trick440 (09/30/07 06:16 PM)
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#169281 - 09/30/07 06:19 PM Re: New business sharing profits & other expenses help [Re: Trick440]
dougwells Offline

Member

Registered: 05/03/03
Posts: 1228
Loc: kamloops BC Canada
 Originally Posted By: Trick440
Well after crunching some more number this is what I came up with.

If I pay him 30% commision of the actual profit, then I will make 36% of the actual profit. So I would make 36% for doing nothing but owning the business. Sounds like it could be a bit too much. What do you think? What % do you think would be fair in this situation.

This is bottom line every expense paid, the company needing to make 50,000a yr. minimum. Any profit over $50k, there will be an extra 10%.. which can be turned into a bonus, or whatever.



I am a one man operation I work from home and my overhead is 4000/mo.

What is your overhead per month.
btw that 4000/month is only my Indirect costs.

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#169282 - 09/30/07 06:25 PM Re: New business sharing profits & other expenses help [Re: dougwells]
Trick440 Offline
Member

Registered: 08/15/05
Posts: 248
Loc: Waterford, MI, USA
overhead... Not much, a van, gas, insurance, maintenence and my garage.

Any chance you want to email me a quick draft of your expenses? Trick440@comcast.net.


Edited by Trick440 (09/30/07 06:31 PM)
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#169284 - 09/30/07 06:28 PM Re: New business sharing profits & other expenses help [Re: Trick440]
dougwells Offline

Member

Registered: 05/03/03
Posts: 1228
Loc: kamloops BC Canada
I have to search for Alines very good list of overhead.


http://www.electrical-contractor.net/for...true#Post157718


Edited by dougwells (09/30/07 06:34 PM)

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#169285 - 09/30/07 06:37 PM Re: New business sharing profits & other expenses help [Re: Trick440]
LK Offline

Member

Registered: 01/21/03
Posts: 1721
Loc: New Jersey
 Originally Posted By: Trick440


He has clients from working with another company, which is not working out. I'm not sure if he does what he does now without permits or off the previous company.




No business but he has clients, (FROM WORKING WITH ANOTHER COMPANY) Now there is a real liability issue, that can cost you plenty in legal fees, does this guy understand, that he can not just, steel someones accounts, without legal problems.

His proposal sounds almost criminal, You may just be better off offering a job to an employee and giving the employee a bonus on jobs brought in.

He was doing jobs without permits, so he already creates libalities, that you will be burdened with, he is a nightmare waiting to happen.


Edited by LK (09/30/07 06:41 PM)

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#169288 - 09/30/07 07:16 PM Re: New business sharing profits & other expenses help [Re: LK]
dougwells Offline

Member

Registered: 05/03/03
Posts: 1228
Loc: kamloops BC Canada
Well heres one month from last spring .
auto insurance 159.89
auto operating 585.32
auto repairs tires or even auto payment 583.17

bank charges for account 71.00
business development 164.67
liability insurance 82.40
licenses and bonding 39.00
book keeping 200.00
INTERNET 49.00
office maintenance 68.68
office insurance 20.59
postage 41.42
printing and reproduction 25.00
office supplies 162.14
employee benefits 95.94
office rent 350.00
shop supplies 282.00
telephone and yellow pages cel phone and 650.00 includes an ad in other book
electric and gas 140.00
workers comp 145.00

that is almost 3600.00
and theres a few things i have missed like lost tools. theft , damage,tool wear and tear ladder replacement etc

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