New Buisness partnership advice needed

[cheferson]

Thanks! Great advice! That's kind of what I had been thinking. Im very green on the business end so any and all advice is appreciated! Any others?

[zacs]

It sounds like a good idea, and I can understand not wanting to get too bogged down with legal nonsense, and on the other-hand, wanting to cover your a$$ too.

In my opinion, the big question is... how are you going to determine "profit."

Profit = Sell Price - Cost.

So how do you determine cost?

Cost of Materials... easy enough.
Labor.... you say your labor is free. So you don't calculate it into the COG? That isn't really fair to you and isn't what I would call a partnership. If you don't calculate it into the cost, then basically it gets added into profit and she just got half your wages. But I guess if that is what’s in it for her then so be it.
Overhead... this is where things get tricky... consider cost of using the space, electricity, insurance, water, gas/oil, etc... Then there is other stuff like taxes, depreciation and whatnot, but I am not an accountant, i just have some business experience.

What I know is that cost is complicated to determine, and you want to make sure this is ironed out before you start, so that when you go to market and sell $100 worth of mushrooms, she does not come back and say profit was $2, so here is your buck....

Personally i can't stand dealing with lawyers. If this is someone you really feel like you can trust, then I would just sit with her and try to work out all of the details & expectations ahead of time. I would not hold any punches & be as completely direct as possible. If you are thinking something, better to just get it out in the open and discuss than to beat around the bush. Once you are both on the same page, get in the dark and start growing shrooms.

That is my opinion - fwiw

[cheferson]

Good point on what will determine what the profit is. I don't mind the labor part so much as she is supplying the funding, insurance , space, etc that would be impossible for me. PLus she alread has the brick and mortar and distribution all set up . SHe even told me to talk to a lawyer too . I do get a good vibe from here , but as other have said best to cover your ass on all bases.

[zacs]

Originally Posted by cheferson

...I don't mind the labor part so much as she is supplying the funding, insurance , space, etc that would be impossible for me.....

Don't forget, that all of that is getting covered in the Cost ( in theory). So everything she puts in comes right out (agin, in theory).

She is also building HER brand I assume? That has significant value that is very difficult put #s to.

Don't sell yourself short.

And don't forget your exit strategy.

[BigFish]

If you are not careful she may treat you like a mushroom.....keep you in the dark and feed you lots of s-h-i-t! I don't like the smell of it Chef....she has all the money invested....what does..."split the profits" mean?? 50/50??? 60/40??? 70/30??? See a lawyer if you like......I would just plain want to be paid for my time......keep all the info to yourself.

[cheferson]

I hear ya BF, but the alternative is working for mousilini , getting the shaft daily, nit picked , for chump change and 24 hours a week now , and 32 in the summer . Yey!!! NOT!

[zacs]

OK, after considering this some more, here are some more thoughts.

Seems like your main concern is you put time and effort in, she gets a mushroom business started, and you are out in the cold (or in the dark may be more appropriate...)

Right?

I can almost gaurantee that is what will happen. Without making you an official legal partner of her business, or a divission of her business, I can't see it ending in any other way.

A quick question for you. Is there room for more than one specialty mushroom company in the SE New England market? If so, then take this as a great chance to learn the buisness side of growing fungus, and the ins and outs of how to start up this type of company. Go into the deal knowing your are building her business, make all of the mistakes on her dime, then when the time is right, go start your own place... this happens all the time in my business, which explains why there are so many sefood guys out there. But if the market can't support you both, then this may not work...

You could even tell her you just want to work as a consultant for her mushroom start-up. All she has to cover is your fee, and you do all the work. That is always a possibility. Or tell her you just want to be the VP of her Mushroom Division, and to put you on a salary.

Anyway, obviously things are a little slow for me right now, I gotta get back to work.

good luck,

Zac

[Nebe]

After some thought, I would say that if i were in your shoes, i would say partner up or nothing... by her saying she might want to do something down the road, is pretty much telling you that she wants to keep her options open with you, but get everything out of you that she can. What is between your ears is worth a lot to her and it is worth it for her to commit something to you.. Right now, she is giving you nothing really.. As zac said, what are profits? she can say that she is operating at a loss for years and you will get nothing. If she agrees to 50% of gross sales, then OK.. she is willing to eat the loss and you will walk with some $$$

[afterhours]

a very wealthy man told me many years ago- partners are for dancing...

[cheferson]

But no partner means , this goes on the back burner for me for a few years until I have the money . Mean while she is building her mushroom business regardless of what I do , while Im still waiting....

[Nebe]

all these guys are posing very valid points.

is she single?