Would you split the profits 50/50?

14 replies
I just started an offline business with a partner and we're focusing on Google Places & SEO to start with FB Fan Pages and Mobile Marketing to offer down the road. Here's the situation....we're following a WSO that shows us how to do mailings to get clients....we each can spend a different amount of money for the mailings. We decided to each pick a niche or niches and do the research then send out the mailings. So if she obtains a client with her one mailing and I obtain 2 clients with my mailings should we still split the profits 50/50 or should she manage her clients that she gets and I'll manage the ones I get plus we each keep the profits from the clients we got from our own mailings? Then we have the monthly residuals from our clients, do we split them 50/50 as well? I just wanted some suggestions on running a successful business with a partner and how to manage it? Thanks!
#50 or 50 #profits #split
  • Profile picture of the author Limekwat
    If you want an equal partnership it should be split 50-50 unless you're putting in unequal amounts to start the company. That being said, I would make sure to speak with a lawyer about writing up a contract in such a way that if one person isn't pulling their weight they can be cut off or lose some percentage.
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    • Profile picture of the author germc
      Originally Posted by Limekwat View Post

      If you want an equal partnership it should be split 50-50 unless you're putting in unequal amounts to start the company. That being said, I would make sure to speak with a lawyer about writing up a contract in such a way that if one person isn't pulling their weight they can be cut off or lose some percentage.
      Yep vesting is really really important, best to get this out of the way at the start too, otherwise it could lead to some very nasty situations down the road.
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      Makes finding customers for your product easy :-).

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    • Profile picture of the author pixiesloveme
      Originally Posted by Limekwat View Post

      If you want an equal partnership it should be split 50-50 unless you're putting in unequal amounts to start the company. That being said, I would make sure to speak with a lawyer about writing up a contract in such a way that if one person isn't pulling their weight they can be cut off or lose some percentage.

      I would agree. I have been in this situation before.
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      • Profile picture of the author octobergal
        Thanks for all your replies and suggestions! Much appreciated!
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        • Profile picture of the author mscopeland
          Everything should be spelled out in your articles of incorporation at least a business agreement. If it's a 50/50 split, then that goes for income and expenses.
          There's no.. Yours/Mine... It's The business's money.

          When the business is able to pay you both, it would be equal amounts.
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  • Profile picture of the author Dexx
    I'd split profits if it was in writing (and legally binding) as well as the amount invested was equally split between time and/or money.

    I'm sure there's plenty of "business partner screwed me" horror stories out there for you to see why this should be done...

    ~Dexx
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    • Profile picture of the author Kevin AKA Hubcap
      Octobergal,

      It might just be me but IMO you and your partner sound kinda disjointed. You started a business partnership with her yet you haven't discussed (and really everything should be clearly delineated and written down) how you're going to distribute profits.

      It also seems you're not clear about exactly which strategy you're going to employ or how you're going to divide the work.

      In my humble opinion you should get these details ironed out before you take on clients. I'm all for jumping in but when dealing with partners you need to protect yourself and the business by having everything spelled out.

      Kevin
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    • Profile picture of the author s62731
      50/50 partnerships do not work. Never have, never will.

      I have learnt through first hand experience. After being told 1million times it wouldn't work, me and a friend went into business together.

      He seemed really motivated. Was always a hard worker. But he still did not pull his weight.

      I ended up doing 3 times as much work as him, put in more money and took it much more seriously.

      It ended up that I had to teach him things which he didnt know, I had to force him to do work etc.

      then when money started coming in he wanted 50/50 share. Which I had already agreed to. So he made money off my back.

      As soon as that happened I spoke to him about it and he baisically cracked the ****s. So I gave him the business we had started (it was not worth much) and went off on my own.

      I ended up starting my own business and was a direct competitor. Squashed him like a bug.

      Anyway.... I would never go into a 50/50 partnership ever again. Better off working parallel with somebody.

      As in you both have your own business, make your own money. But you help each other out, teach each other things and work together.

      This way when you make money it is yours. And not some lazy slobs.
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      • Profile picture of the author octobergal
        Thanks for all the replies. You all gave me some things to think about.

        Kevin...No, I don't believe we're disjointed. We did discuss splitting everything 50/50 at the beginning. Now that we're following a WSO and it consists of mailings, she's not able to mail out as many as I can so that's why I was going to put more out there. We did decide who was doing what work, we also have outsourcers in place for a lot of the work. I just mentioned managing our clients because if we didn't split the profits equally and split them based on who got which clients then we should each manage our own. I just wanted to get some opinions. I think 50/50 is the way we'll stay.

        s62731....That's ashame that happened. I haven't had anyone tell me it's a bad idea yet. I do know a handful of people who are in business with a partner or a friend that became their partner and they're doing ok. I'm glad you mentioned it though, because if I saw she wasn't pulling her weight then I would speak to her about it, but I will not mess around with it. I can go on my own very easily.
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  • Profile picture of the author Brendan Vraibel
    If all things are equal as far as the work load goes, I would just take out the difference in your initial investments once the profit comes in. I would for sure get all of the details worked out before moving forward though.
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  • Profile picture of the author swilliams09
    I don't believe in partnerships and 50/50.

    My first was my best friend. It nearly ruined our friendship. Not only did I end up going out to get clients, and do the majority of the work, he wanted to over charge and nickel and dime my clients and nearly ruined several projects. Only years later did he acknowledge that he was wrong and we are still friends.

    My second partner, I came up with the market, the company and website name and the marketing plan. I waited 8 months for her to do the website, (oh if only I knew then what I know now!). She told me we should split things 50/50. But some of my skills pulled more per job. I didn't think it

    I believe in JVs. I have 3 companies owned by friends who I have JVs with. We will do promotions together and make an agreement on price for that particular campaign and we will decide how much is going to be spent and who will pay for what and any profits come after the spender recoups their cost. This formula has allowed me to work with my friends and stay friends.

    Are you set up as a legit company? If so you should already have some idea of the budget costs for your marketing, you both should know how much is going in the pot and of course the business doesn't post a profit until you've covered expenses and costs.

    If you aren't set up as a LLC or SCorp or even just as a legit small business, I suggest you do so ASAP and in the process sort out responsibilities and financial payouts.

    My question is this, and this is the one I had to ask myself. Why do you need a partner?
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  • Profile picture of the author topgold
    Even though I would not do a 50/50 business relationship with one of my friends, I do admire the fact that you are doing it yourself. None of my friends have a CLUE about what I am doing!
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  • Profile picture of the author Seantrepreneur
    First, I think you should definitely make this partnership legally binding. Weather is that is setting up a LLC or some other form of business entity. Second, if you want to keep everything 50/50 to be fair, then you should both put in the exact same amount on this mailing to test this strategy so that there will be no hard feeling if one pulls better than the other. Lastly, if you truly have a company set up then a percentage of profits should go back into the company so that you'll have money for other campaigns and expenses. Pulling out profits immediately is a limiting how fast you can grow.

    Either way you should definitely have something set in stone that you both 100% agree on before you do anything at all.

    Hope that helps!

    Sean
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  • Profile picture of the author RySpencer
    If you plan on being a partnership, you need a lagally binding contract. You also need to sit down and discuss a budget. This is very important. If you each have little overhead (ex you work from home) then the only expense might be marketing.

    Find a number and each contribute to that. Each of you find the niches you want to target but equally participate in the marketing, at least financially.

    ALthough it can be fun to enter into a partnership with a friend, they can sometimes turn out messy if the proper communication has not been laid out at the beginning. At lease get it on paper and sign it. If you can't afford a lawyer, create a written contract for now.

    Good luck!
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