What is the appropriate profit sharing for small business partnership?

Posted by Fitz Villafuerte under Business & Entrepreneurship on September 9, 2013

Im starting a small food business and I’m thinking to partner with a friend of mine. I’m trying to figure out how we should split the income percentage wise. The reason why I’m thinking to partner with my friend is because he is a fresh grad chef with full of new ideas that we could put into the menu. Now, to give a clearer view on the tasks, I’ll be in charge of all financial investment, planning and research, sales and marketing, mostly the management part. His job is to provide the menu, cook (at least until we have another cook to be employed later on) and make sure that the food is on quality.

I did some reasearch and got some idea that we could do something like 70/30 or 80/20 split until I get my investment back, then at that point we could probably do a 55/45 or 60/40 split (the reason for uneven ratio is to recognized the authority of the partner). Is this approriate?Would this be a fair split? 

On the other hand, I know that in the first few months or maybe a year (hopefully not years :(), I am still recovering my investment, how will I do the profit sharing (considering that there’s no profit yet).

I’m just new in the world of entrepreneurship so forgive me if im not asking the right question :). But your advise will be highly appreciated 🙂

Thanks!




Tags: , , ,

Leave a Reply