
How Much Equity Should I Give Up? *URGENT!*
He managed to get a large corporate client for us through his brother, a top-level executive of a rental properties company. His brother wanted a surveillance camera for a rental property. Since processing this order, there has been nothing but trouble the entire way, due to some mistakes I have made (in sourcing the product, shipping problems, etc.). For each resolution we try to bring, another problem comes up. Just about every conversation he's had he has been frustrated with me and yelled, each time a new problem comes up.
He called me last night and flat out told me that "this isn't working." He's arguing that he needs to become a business partner (at 50/50), because he sees me as being incapable of carrying out tasks on my end (ordering product, communications with client, etc.). So instead of 25% commission on sales, he wants a 50% stake in the business.
The other issue that ties into this is that his brother has been looking at doing a $20,000 deal with us, to purchase promotional products for new tenants. Being very hesitant, I said that I didn't feel comfortable giving up equity (especially that amount). Ultimately, I gave in to the 50/50 deal because he said he would break off all ties (which also meant that he would source and get that $20,000 sale himself). I agreed, saying that things would work better if he were on the front-end doing sales, calling potential clients and doing customer service (which I can't do because I currently have a job working 30hrs a week, 8am-2pm M-F) while I sit in the back-end working the website, doing social media, ordering products and doing the finances (which is pretty much all I've been doing the entire time).
I tell my girlfriend and some friends about this and they yell at me for doing it (I knew it probably wasn't a good idea). I've already committed in word to this agreement, but nothing has been written in stone (legally). I am thinking of calling him up and doing 51/49 instead, MAINLY because I started this business up myself and invested roughly $5600 in capital and a great deal of sweat equity into it.
What would you suggest I do? My girlfriend and her dad (who is an business person, day-trader, econ. guy) suggested that I let him "buy into" the business, which at 49% of my overall investment would be about $2600 and do 51/49. Any thoughts on that?
In all honesty, I would prefer 51/49 because we would be partners but I would keep control. He provides value in being an aggressive salesman and doing the public relations, something that I can't do with my current job.
Thank you!!
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