# General Business Category > Entrepreneurship and Business Management Forum >  Business Plan. What to look out for?

## Snoopy_inc

Hi All,

As the topic states i am looking to start writing a business plan for a new company im going to be starting.... been wondering about this whole concept of a business plan vs a idea of where you wanna go.  I find it quite daunting the prospect of having to suck information out your thumb about how to do a business plan and implemention especially when you dont have much experience in such endeveours.

My question is this.  What could you advise someone on how to get a business plan together and possibly a little guide on what one should look out for?

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## duncan drennan

Cash flow....where will the money come from, where will it go to, and how will you fund the shortfall (if there is).

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## Snoopy_inc

dont mean to sound funny..... but i expected a more.... full answer. :s

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## Dave A

What we need is a link - try crawl the Nedbank site - there was a really over-the-top one there a while ago.

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## duncan drennan

> dont mean to sound funny..... but i expected a more.... full answer. :s


Snoopy, I wasn't trying to give one, partly due to limited time, and partly due to scepticism around some things that "should" be in a business plan.

What I've learnt in my short time as a business owner is that cash flow is the thing which dominates a startup business. When you start breaking that down for your particular setup you will also begin to see where some strengths and weaknesses lie.

I would start by figuring out what all your known expenses are going to be, added some estimate for the unknown ones, and then figure out how many sales you need to make to cover those. If you can't make that many sales from the first month, then you need to figure out how many months it is going to take, and where the cash will come from.

Yes, it is pretty simplistic, but that is where I would start.

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## Snoopy_inc

ic.  Thanks DSD.  That helps me alot more  :Wink: 

does one follow the set criteria that they lay out for you.

IE

Cover page
	Executive summary
	Business overview
	 — 	business profile
	 — 	the product or service
	Management
	 — 	the entrepreneurs
	 — 	the management structure
	The Market
	 — 	industry analysis
	 — 	market analysis

	Sales and Marketing strategy
	Financial statements and projections
	Legal and regulatory environment
	SWOT analysis and risk/reward assessment
	Appendices and supporting documentation

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## stephanfx

I have a piece of software called Business Plan Pro which I used to set up my initial plan, it has almost been 8 months and I am still adding and changing to it. The outlines you gave is more or less what is used in the software, but when I started, I didn't use every option, only those which I thought would help me in my first sale.

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## duncan drennan

I think the "catch" with a business plan is what you intend to use it for. If you want to create one for getting business finance it is very different to creating one for your own personal use.

For example, if you want to loan money from the bank, all you need to put in is how much you want, and what will be surety for that amount  :EEK!: 

Why are you drawing up a business plan?

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## Snoopy_inc

Goals, direction & Focus.

I want to build a business plan to gain direction and have some sort of plan to a goal.  The idea behind it is that if somone comes on board i will have a clear indication as to what i need them to acomplish etc.

Am i barking up the wrong tree?

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## Dave A

To my mind, the one that is the biggest time consumer for least return is:



> Financial statements and projections


In start-ups there are no historical financial statements, and guessing what the numbers might be is pretty much a thumbsuck.

Yes - You need to gring some numbers. But rather spend time on cost per unit, markup, competitive finished price, overheads, working capital (money tied up in production until paid) and available capital. This gives a clue as to volume targets that give break-even, arguably the first critical point to achieve as quickly as possible. If you do your calculations around break-even, and get a reasonable estimate for ramp-up time to that point, you've gone a long way to identifying your minimum capital requirements.

But the mere act of making sure you've got  money available doesn't achieve anything. It's the plan to get and keep customers that's the critical stuff. And that is where the intial focus and thinking must go. The money is a vital ingredient, but it isn't the "magic" part of the business that adds value.

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## Snoopy_inc

I am now using the same product you mentioned above dave.

It asks a bunch of questions i really dont have a clue to but im wadding through it slowley.

Are ther any criteria that one can advise on the way about business plans, that one of you have picked up from experience?

would be appriciated.

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## Dave A

Part of the trouble is cookie cutter templates are generic and a business plan is affected by all sorts of factors. This makes some aspects of these templates pretty much trivial.

I read through the one on the Nedbank site once a while ago. Part of the challenge is that aspects are tailored around getting finance - and the cynic in me says they spend far more time perusing the collateral section than some of the stuff that really counts towards the success of the business.

It does ask some interesting questions, though, that test your understanfding of your concept - and that's what you need to focus on. If it's not applicable, cross it out. If something is relevant that isn't in the template - add it in.

It's *your* plan - done to make sure *you* understand how this is going to work. You need to know:
What the product is.What the product costs.Where the customers are.Why the customer will buy from you.What the customer will pay.How you will reach the customer.How you will be paid.What skills you have.What skills you need to acquire.Where the obstacles are.How much capital you need.What other people are already doing.

There's probably more - but how's that for a start.

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bizsmarts (07-May-09)

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## Snoopy_inc

Thanks ill use that as a base and include it with the rest of my research.... is there a business 101 for the people starting out from scratch?

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## Snoopy_inc

Ok i have a question.

What questions would you ask yourself if you not quite sure of the business.  I know that sounds absurd but let me explain: 

I know what i want to start,  I have the Capital to start it.  I know what kind of products im giong to supply and how im going to supply it.  I konw my medium term goals and long term goals. I am just strugglin to form my short term goals and ask the questions that will give me the information im asking myself.

I was wondering.  what questions does one ask oneself about the new business?

IE: what are my strengths?
What are my weaknesses?
What procedures do i require?
etc.

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## Dave A

> is there a business 101 for the people starting out from scratch?


I chewed over that one a bit. And here is why.

The DTI had (perhaps still has) a program that was supposed to develop emerging entrepeneurs. It had a 6 week intensive training course and 6 months of mentorship built in - plus a priority treatment support side that gave folks preferential treatment for government, provincial and municipal contracts for a year.

I was last exposed to the numbers on this about 18 months ago - but they weren't good. From memory the success (survival?) rate after 1 year was about 2%. And looking at what was being taught, the problem was not the material. I would have loved to sit in on some of that stuff.

When it comes to entrepreneurship, there's an x factor of some sort that isn't injected in courses somehow.

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## Snoopy_inc

I dont have a problem being an entrepreneur.  The problem i face is that i never have used material or read anything serious on business.  I have been around people that own businesses all my life, and have picked up on some of their knowledge as i have gone along.

Its like skipping through a book.... i know certain things but im lacking in areas.  I want to work on those and get them up to speed..... hence the 101 business idea.

On the other question i would like to get your views on that...... maybe you could add to those questions and put ... What to ask your Partners and what to establish in the beginning about what roles are to be played etc.

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## Snoopy_inc

hrm... still no reply... ok i guess ill keep looking around.

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## RKS Computer Solutions

Snoopy,

sbinformation.com
entrepreneur.com
37signals.com
jdsblog.com

More here:
Google search results

Hope it helps

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## Dave A

> hrm... still no reply... ok i guess ill keep looking around.


A rather disappointing comment given the 1-on-1 attention given after your previous post  :Frown:

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## Snoopy_inc

Dave,  Wasn't meant to be harsh.  But if you read my question its a 2 question question.  You answered alot in the 1 on 1 which i appreciate but i am still looking for the answers with regards to the "What to ask your Partners and what to establish in the beginning about what roles are to be played etc."

Sorry if you misinterpreted my words.... but i still don't have the answers for that specific question.  Hence the message to refresh the topic.

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## Snoopy_inc

> Snoopy,
> 
> http://sbinformation.about.com/od/bi...startup101.htm
> http://www.entrepreneur.com/starting...icle38290.html
> http://www.37signals.com/svn/archive...et_started.php
> http://www.jdsblog.com/2006/09/18/bu...business-plan/
> 
> More here:
> http://www.google.co.za/search?q=sta...ient=firefox-a
> ...


Thanks RKS.  looks like alot of the stuff i was asking about.  thanks for the links.
 :Big Grin:

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## RKS Computer Solutions

Snoopy, the name is Riaan...

Here is a link to help with the partnering stuff....

http://www.google.co.za/search?q=par...ient=firefox-a

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## Snoopy_inc

Hi Riaan,  didn't see your name anywhere so i used your nick  :Wink: 

Dave..... you should know me better and this is one of the mysteries of the inet for one to take something written out of context.

If i offended anyone i do apologize.

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## RKS Computer Solutions

Snoopy, it's cool...  Have you come any closer to answering your unanswered questions regarding partnerships and startup businesses in general....

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## Snoopy_inc

To be honest im still tugging at the idea of partnership... i have been reading alot of things on the Net but as they say.  Personal Experience beats any book written hence my questions to you guys.

Thing is i want to be Prepared and being  under prepared im going to be getting the bad end of the stick.... the issues i face are a partner that knows business well vs me a new time business owner.  I have to know the quirks and the shortcomings etc so i can get ready for them before i stick my neck out and get taken for a ride.

I'm sure you understand.

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## RKS Computer Solutions

If you cringe at the idea of taking on an experienced partner for the sake of business, rather dip your toes into the water on your own...  Taken from the objective of making a hobby into a business, this would be great as you would be learning at the same time as building up your reputation, instead of just looking like the lackey for the guy with the knowledge...

You've mentioned that you've been around business owners your whole life, so take the plunge and use those people as mentors, have them guide you where needed and keep on asking questions, it's the only way you'll ever be able to stand on your own feet...

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## Snoopy_inc

well my thinking is that i could learn alot more by having a partner on this venture... this is by no means the only company that i will start.  I have my eyes on a couple of things that will work together eventually.

My query still stands about what roles one should take and what kind of questions one should ask that there isn't any misconception of who does what and how one does it etc.

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## Dave A

Part of what makes this tricky discussing in a forum format is that when it comes to partners there are so many variables. It is certainly way more complex than kicking off on your own.

One of the quips I remember was something along the lines of "You need to pick a business partner more carefully than your wife!" Whilst I'm not sure about the _more_ part, it certainly isn't that far off the truth.

So how do you go about picking a life partner? Is there really a stock set of questions? 

I think at the end of the day the key ingredients are trust and commitment. Missing either one and the prospects of trouble escalate dramatically.

Probably the only other piece of key advice - and this one I expect should be a basic _must_ although I break it all the time - Plan the divorce before the wedding! With any luck you'll never have to implement that plan, but simply having it there, and knowing full well the price that goes with the break-up can actually prevent a poorly considered parting of ways.

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## Snoopy_inc

"Plan the divorce before the wedding!"  --- give me an example of what you mean by that.  IE how would i go about planing something like that?

Some sort of legal document that says after a period of time either one of us can buy the other out or how would one work it.

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## Dave A

Basically, issues around dissolution of partnership need to be thoroughly dealt with in the partnership agreement. Unfortunately, every agreement I've ever seen has had some aspect in it I've never seen before, or some subtle combination of nuances. There really doesn't seem to be a "best practice" version.

Probably the only way to deal with this is to get some sort of standard proposed agreement and check that both partners are comfortable with every aspect. Don't be shy to propose a change if there's something you're not happy about.

Whatever you do, you're unlikely to be doing the "dance of joy" if the day ever comes where you start using the bust-up clauses - so don't expect some elegant solution. Win/win is rare at those times.

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## Snoopy_inc

IC..... things are getting clearer this side  :Wink: 

Keep the info coming  :Smile:

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## stephanfx

> f not for the divorce, the business partners might still be together. The two men had scraped together enough money to open a small pool supply store, which they built over 20 years into a profitable chain of 65.
> 
> But suddenly things got ugly. In the throes of a divorce, one partner decided he needed cash fast. Hoping to sell his half of the company, he found a group of investors who wanted the whole business. The other partner didn't want to sell; he offered to buy his partner out for less than the partner wanted. Instead, the partner who wanted out persuaded a judge to order the partnership dissolved, the assets sold, and his former partner fired for interfering with the takeover.
> 
> Read full Here


Searched for business partnership traps, and came across this article, thought it might help.  :Smile:

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## Snoopy_inc

Doubt the laws in this country will allow for that.  That sounds usa based imo.

That a nice site though stephanfx

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## duncan drennan

> Doubt the laws in this country will allow for that.  That sounds usa based imo.


You might be surprised. It things do happen to run awry, then it will all come down to the quality of the partnership agreement that was drawn up in the beginning.

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## stephanfx

I agree that it sounds usa based, but like Duncan said, some aspects might really be applicable in our country, not by the laws maybe, but merely by principles.

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## Chatmaster

Hi Snoopy_inc

I know I am a bit late in this discussion, but the moment someone mentions partners I get a eye irritation. My eye starts blinking uncontrollably and my head starts spinning.

I have owned many businesses in my lifetime. Not one single business I have had with partners worked out. Maybe it is just me or just a poor judge in character. Avoid a partnership and rather walk the road yourself. The closest you can come to a partnership is an investor that invests and further has no say at all, nor the shares to dictate. The best way I can describe a business is that it is a marriage. In a marriage there is one wife and one husband. The moment there is more than one husband; there are issues and problems, not to mention your wife might run away with the other husband! 

Avoid a partner seriously. My experience with people coming in on a partnership is that they often manage perception until such time that you have made it a success anyway. Others again dream about the millions they will make but simply do not know how to make it. Dream they can, make they can't!

Make things on your own and rather employ people to do the rest for you. There is no skill or talent in the world that cannot be employed  :Smile:

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## Snoopy_inc

I would agree with doing it on my own but here is the catch... i am currently working for him and making a good living.  He is offering me the same salary plus i get to start this venture with him.  So i don't have the security problem etc.

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## RKS Computer Solutions

I'd say the only catch is moving from "employed" to "partner" and having all the extra responsibilities and getting the same salary...  What's up with that?

Starting a new venture/partnership means if you go in 50/50 then you should share in the profits, not be pulling a salary.

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## Snoopy_inc

No no you don't get.... i work for him on another company... and we will be opening a NEW company where we will be partners.  I will work with both while the one is getting up and running and the one i work for him will get salary from.

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## stephanfx

Cool, you are working for him and at the same time starting a company up with him. Here is a question for you though, what happens if the new venture does not pan out, and he blames you? He might not be that type of person, but business is a nasty game. I once heard a saying:"The only ship that does not sail is a partnership". While in many cases, this rings very true, I hope that yours does, for your sake. 

On the other hand, it might go extremely well, at what point will you stop working for him and start working with him?

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## Dave A

> at what point will you stop working for him and start working with him?


Now that be a most astute question. There is a subtle change in mindset involved - and although subtle, it is something of a leap.

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## Snoopy_inc

I agree stephanfx.  This is the problem i am having.  At some point i need to change and so does he.  The only way i can see this working is if i own a majority share in the new venture.
Hence the reason why im posting here to find out what your opinions are for me to handle this situation?

As far as dave post is concerned i agree that one need to change ones mindset.  I have started already with this and its a process by which i need to learn to work on a level playing field.

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## duncan drennan

> The only way i can see this working is if i own a majority share in the new venture.


Hmmm....a few questions:

1) What value are each of you bringing to the partnership?
2) Why do you feel that your value is more than his?
3) Is wanting a majority share a control issue, or a value issue?
4) If you are already looking for ways to have control, is this really a good idea in the long term?

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## RKS Computer Solutions

good questions!

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## Dave A

And whilst I know the answers because I've asked the questions before, I must leave that to Snoopy.

What fascinates me in this thread so far is that we have ended up at exactly the same crunch points I did with Snoopy earlier in the 121, albeit by a slightly different road.

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## Snoopy_inc

> And whilst I know the answers because I've asked the questions before, I must leave that to Snoopy.
> 
> What fascinates me in this thread so far is that we have ended up at exactly the same crunch points I did with Snoopy earlier in the 121, albeit by a slightly different road.


Dave,  Yes and No.

Yes there are some points that we did talk about that came up here again.  What this has done has allowed other point of views to come across and provide a much more rounded answers. more brains are better then one.   This may help others that read it or in turn help those that need to ask this question as they may be starting up a venture also.
1) this helps me
2) it helps the members of the forum

I dont do things for no reason..... im surprised you think that i would not take what you told me to heart and use it?

As to dsd questions,

I will basically be the lead on this new project... my time my experience and my understanding will be used.... where as his capital his business will be used.  I will built it myself and will work with him on input and marketing advertising etc

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## Dave A

> Dave,  Yes and No.
> 
> Yes there are some points that we did talk about that came up here again.  What this has done has allowed other point of views to come across and provide a much more rounded answers. more brains are better then one.


No doubt. But we're still at the same key crunch around the *controlling* interest? The rest you always had pretty much figured out already.



> im surprised you think that i would not take what you told me to heart and use it?


I think you got me wrong. I'm chuffed you delved deeper here. And frankly, given the importance of the topic, I'd be cautious of taking a single point of view myself.

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## Snoopy_inc

i have to admit i prefer a forum format as i can come back to it at any time and review my questions and answers

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## stephanfx

Okay, now here is a question, how much do you trust your new soon-to-be partner? Seeing as you are really wanting to give this a go, i would say trust is the final question for me, if I do not trust someone enough, you can forget it.

Check all the documentation, make sure there are no loopholes which could cost you your side, and a tip, if you find such a loophole, reconsider the whole deal.

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## Snoopy_inc

That is the thing... i trust him as much as i would trust any boss.  I firmly believe he wont screw me if we both making money.  The problem comes in is when something goes south... i really dont konw how he will act or rather react.

I think if i have the proper documentation in place and work off of that i think it wouldnt be a problem.

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## stephanfx

like i said, find a lawyer, attorney or whatever, and have him/her have a look at the partnership agreement. If you pay someone to look at the documentation, they will have *your* best interests at heart. If your boss takes offense in this, worry, but have it checked anyway by an independent lawyer, no previous relations with you or your boss. IMO, this should impress your boss, as it would show your thoroughness and competence to make sure the business venture succeeds.

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## Snoopy_inc

where do i get an agreement drawn up... who do i speak to? We havent even got the agreement up yet so i guess i should start there.... but who do i speak to first to get that done?  any opinions would be great and maybe contact number of somone you suggest that i should use?

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## Dave A

> That is the thing... i trust him as much as i would trust any boss.


Partner? (It's the mindset thing that's my biggest concern here).



> I firmly believe he wont screw me if we both making money.  The problem comes in is when something goes south... i really dont konw how he will act or rather react.


Sometimes when you make a *LOT* of money it can get a bit shaky too.



> We havent even got the agreement up yet so i guess i should start there....


What sort of business entity - partnership, cc, Pty Ltd?
Any trusts or other types of juristic persons with shareholdings involved?
Are we talking 50/50 or 49/51?

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## RKS Computer Solutions

Talk to Paul, our in house lawyer it seems for theforumsa...  http://www.theforumsa.co.za/forums/s...newpost&t=1558

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## Snoopy_inc

Dave i said Boss cause he currently is My BOSS..... there is no partner yet.
I will agree with you on the making alot of money part... that can cause issues normally.  

Look i havent formed the business yet, I dont know if its going to be a cc or a Pty Ltd,
"Any trusts or other types of juristic persons with shareholdings involved?" -nope
Still going to negotiate the share holding.... i would say go for higher then 50% and less then 50%.

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## duncan drennan

Who initiated this business opportunity?

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## Snoopy_inc

I did,  he has always promised expansion and that he would help with such a expansion..... i think he knows if he didn't he would have lost me a long time ago.

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## duncan drennan

This is just an opinion, an outside perspective...

He is offering you a really good opportunity. He has the cash, the underlying business structure (which will support the new venture), and the opportunity. You bring your skill and the labour. Both are valuable.

There are a lot of employers who would not even bother to offer this type of opportunity to an employee Ã¢â¬â they would simply tell them to do it, and the boss would retain full ownership of the new venture. There are a lot of employee's who would jump at a similar opportunity, regardless of the size of their share.

The thing is, your boss has carried all the risk of creating a business and employing people, and effectively creating this opportunity. Sure, you've helped as an employee, but you have been paid and have carried no real risk. Now you are being offered an opportunity that has very little real risk, and you appear to be taking that attitude that you should have control of everything.

I think you should be happy Ã¢â¬â ecstatic in fact Ã¢â¬â with any share over 25%. I think you are underestimating what your boss brings to the table.

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## Graeme

Well said Duncan.

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## Snoopy_inc

Dsd,  I understand what you are saying but the thing is this delves deeper.  The main reason he offered this to me is cause he doesnt want to offer a % of his current company to me of which i was promised.  I have agreed with him that it is possibly better to start a new venture instead of him having to split things and explain himself on certain spendings etc within the company.  The new venture alows him to get off having to give me a % of his current company.  I know it sounds selfish but it really isnt.  I have been promised a share of the company for the last 3 years.  It is only happening now.

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## Dave A

> I think you should be happy Ã¢â¬â ecstatic in fact Ã¢â¬â with any share over 25%. I think you are underestimating what your boss brings to the table.





> Well said Duncan.


Now *that* is a really interesting comment! Particularly against the backdrop of the "share the wealth" sentiment that is being bandied about so much in South Africa nowadays.

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## Snoopy_inc

Dave im confused... why that interesting? and what is your view point on his prospective.

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## Dave A

From my understanding, the comment is to a large extent not applicable to your situation. 

*My take on your situation is:*
This is _your_ business idea. Your problem is that you don't want to leap off the cliff to go out and make your fortune on your own. Therefore you need to trade off a shareholding in return for keeping your existing security blanket. I know it comes with benefits, but realitically there is nothing really preventing you from striking off on your own with this one other than the risk.

*But back to Duncan's statement and Graeme's endorsment:*
I was struck by the simple "natural order of things" paradigm of it - it comes from a normal business environment. And to a large extent it runs against the grain of what we're seeing at the moment.

We've got government "encouraging" ownership transfer to people who in a pure business environment would not even get a look-in. Although the "benefit to business" is being manipulated into a positive on the ownership front, let's not forget the real reason behind the drive.

We've got workers jumping up and down to get "a share of the company's profits" - when they already do. (Where do salaries come from?). 

I just don't think there is a healthy understanding of just how fragile profits can be, and what it really takes to generate them in a "normal" competitve business environment.

Basically, it just struck me how far removed we are at the moment from a normal business enviroment. We've developed this nurturing sharing environment theory, when the reality of the past was - "You want ownership, off you go on your own to make your own way."

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## duncan drennan

> *My take on your situation is:*
> This is _your_ business idea. Your problem is that you don't want to leap off the cliff to go out and make your fortune on your own. Therefore you need to trade off a shareholding in return for keeping your existing security blanket. I know it comes with benefits, but realitically there is nothing really preventing you from striking off on your own with this one other than the risk.


Going back and rereading, I actually misread something. I thought that your boss had initiated the opportunity (my mistake). Seen as it is you who has initiated that changes things a bit. I still think that you may be underestimating what your boss is bringing to the table. What he brings provides a lot of stability and greatly reduces your risk.

When I was employed full time and promises of this and that were bandied around I never realised exactly how much sweat and pain had already gone into that business. Having been on the other side — just starting up on my own without all the risks of employees — has given me a very different perspective and appreciation for my previous boss.

I have to agree with Dave there, you need to figure out the trade off between shareholding and your security. You have the opportunity to get your foot in the door in a relatively safe way, make use of that.

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## Dave A

> What he brings provides a lot of stability and greatly reduces your risk.


The question is, is that worth 50%?
To a large extent, it's actually a *very* personal decision.



> When I was employed full time and promises of this and that were bandied around I never realised exactly how much sweat and pain had already gone into that business. Having been on the other side — just starting up on my own without all the risks of employees — has given me a very different perspective and appreciation for my previous boss.


That needs to be made into a poster somehow.

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## Snoopy_inc

lol dave  :Wink: 

Ye make it into a poster im sure all business owners will buy one for their office :P

look i have to be honest i dont mind the % part i just need to find a way to deal with the fact that i will be working for him AND be his partner.  since i will be working for him in the other business and with him on the new venture at the same time.  I will do both during the day etc.

Hence my reasoning for the higher %.  May not be a great reason but one that will make me feel better about the process.

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## Dave A

As I said - it's a personal decision.

I know what I'd do in those circumstances, but for others it might be too much trouble over 1%.

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## Chatmaster

Really turning out to be an excellent thread. Some really good posts here!

The only issue I have with really giving a valuable response to all I have read so far is understanding the business concept and the TRUE value your boss will be bringing to the table.

IMO I would much rather employ skills rather than giving away a share of a business. Maybe that is just me. Well to get back to the points here...

I would suggest that you get a lawyer to draw up a solid agreement between the 2 of you. Most of the agreement will depend on the contant of your business plan. The agreement must be detailed with regards to both parties involvement, contribution and liability. What is very important is who manages the financial side of things and who manages the operational side of things. Then registering an official business as Dave suggested. Opening a business account for it. 

To get back to the business plan. It will serve as the building block of the business and how it will operates. It will get you to setup a solid budget and do some research into competitors. It will also get you to make some estimates and set targets that you can shoot for. A business plan is a must in any kind of business.

So my suggestion with your todo list will be as follows:

Draw up a business planGet a lawyer to setup a agreementAppoint a good bookkeeper or AuditorRegister your businessOpen a bank account

When reviewing your company type, ensure that you keep in mind that the business must be a legal entity. Reduce your personal risks.

Something else I just want to mention,...
When you compile your business plan, ensure that your targets you set are easily reachable and not built on dreams. There is nothing that messes up a partnership as much as negative stress and impossible targets. Having an own business comes with stress, but negative stress is when you start falling into a hole and grab hold of all kinds of twigs and leaves that will only come with you as you fall in the hole. But you also get positive stress, stress that can motivate you to do even better than before.

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## Snoopy_inc

Thanks chatmaster.  Appreciate the input.

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## Pierre@Skeg

Sorry for coming in so late. My 2c follows.

You are now stuck in that part of the business life where the decisions you will make will haunt you for the rest of this ventures existence. On the other side you are making decisions about the value of the business and each partners contribution with the least amount of information available. So it is both easy and difficult to negotiate percentage ownership etc. Think very hard about these numbers and issues.

Why not change the nature of the deal than try and figure out how to make the deal work. Aks him rather to be an investor than a partner, and therefore seperate the control of the business from the ownership of the business. This is not an insignificant difference.

And finally I have a question: If you did not work for this guy, would you still have come up with the business idea?  Is it not a oppertunity created by the environment you are in? I can ask my staff now and will get 20 new directions for my business to go in in 10 minutes. But they are just ideas. I have learnt that it takes a helluva lot more than a good idea to make a successful business. And it is not just money.

I work in product development and see a lot of small businesses started from new product ideas. The first employees are always the most disgruntled ones when the business gets successful, they believe it is because of them that the owner is making all the money and the employees are getting stiffed. They believe the owner had the idea but they made it work. That is exactly why he "employed" them, but he did not make them partners. I have also seen partnerships wherby the one that does all the work becomes bitter because the other is making the same money, and the cash the other guy put in gets forgotton. the sword, it cuts both ways.

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## Dave A

*Great* post, Pierre.

/clicks reputation.

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## Chatmaster

> And finally I have a question: If you did not work for this guy, would you still have come up with the business idea?  Is it not a oppertunity created by the environment you are in? I can ask my staff now and will get 20 new directions for my business to go in in 10 minutes. But they are just ideas. I have learnt that it takes a helluva lot more than a good idea to make a successful business. And it is not just money.


That is such a valid comment I just had to give you some rep. Great post Pierre!

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## Snoopy_inc

Pierre i couldn't agree with you more and i know that i have learnt alot from him.  This is where i get confused.  I believe that we could make it work, but in most instances im my own worst enemy.  I will put my heart and soul in and will know that he wont due to the fact that he has multiple businesses... that is going to get to me at some stage.
As far as the idea is concerned... i came up with this idea a very LONG time ago.  I have got a model that i am following of which i have set for myself to not only grow myself but also SA.  (NFSA) www.wellinformed.co.za - Currently a brother forum to Theforumsa.co.za. Dave knows of my ideas and intentions and all i can say right now that this is a stepping stone to greater things to come.

My problem comes in is i am a very cautious person.  I always look at the consequences before i act and analyze if its worth it.  In doing so i have found where there will be issues.  They need to be addressed of course.  I will make sure we address them.  My burden is that i don't know how enough about the whole process of starting up a business.  Hence my posts here.

My one question i asked has been unanswered mostly (except for Chatmaster to a degree  :Wink:  )

What does one ask of partners to make sure there is a equal input for the amount of % they got? And how does one enforce that?
Legally? financially?
I hear you peirre in that you say that i mustn't forget the capital he lays down for it or the valuable input.  Don't get me wrong im not greedy and am happy to have him as a partner. If he inputs into the business.  I can foresee that im going to take this on as my own and going to push it beyond what he is capable of understanding.  Where his skills will get the business up and running mine are of a growing area.  In every job or project i have done i have made damn sure that i push it further and get it to a point where i know its going to be running smoothly if i look the other way for a short period of time.

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## Pierre@Skeg

Thanks.

I think you might want to seriously look at the differentiation between investor and partner.  I like to think of the differnce as the following. An investor gives x money for y ownership and hence y share of the profits. A partner keeps on giving till either the money runs dry or there is a fall out or the company goes bust or it does not need money anymore.

Defining the contribution right from the outset is difficult because it is difficult to compare the financial input vs the intellectual input and inevitably this makes for a negotiation based on the perceived value of the intellectual input. The money is easily quantifiable but the intellectual input is difficult. How smart are you? How much can you do in a day and can you do it better than anybody else? These are difficult things to quantify and when in a straight up negotiation it is not even the real intellectual value but how much you think your contribution is worth vs the investor/partners "perception" of your worth. So at the end you basically pull a number out of the hat and negotiate around it. Maybe explains why a lot of partnerships are 50/50. They just never got around to the negotiation and a 50/50 split is an easy way around it.

I have another question. If you are now 1 year down the line with this venture, your boss put in the start up money and you put in the hard work and brains, and the venture needs more money. The boss says the business needs to now find its own capital and you are forced to look for either investent or a loan. Who is going to either sell their shares for investment or is going to sign surety for a loan?

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## Snoopy_inc

Pierre to be honest i have no clue about that and what will happen.... these are the types of questions that i need so that i know what to throw into the pot when the talks commence again.

I understand the differences in investor vs partner... the thing is that he will be doing things with me on this.... even though i will be the person putting the thing together and getting it to work etc.  He has great ideas also.  

My concerns are exactly what you mentioned with regards to when he stops contributing.... i cant stand it when i work for something and they don't put in the same amount or what their % is worth.

That for me would ruin the partnership... as i get very fussy about things like that.  

Keep the questions coming  :Wink:   they are helping me.

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## Snoopy_inc

Ok here is a sticky one for you...... how do i move away from the other company im employed with?  Do i wait for the new venture to take off and make the money and then wait 6 months to move or do i move when i need to move.

The main problem im seeing is he wants my skills in his current business and if i move off to the new venture he is going to loose those skills either way.  
I have been considering the possiblity of subcontracting.  But i have no clue what legal implications or tax problems im going to have with that.

Something like i move off to the new venture as it starts and subcontract my services back to the company.  This will be on paper but in effect wont be true.  I will still be the same just legally it will be different.
Benefits include not having a boss and being able to move between the two ventures with ease.

Please can someone give some info on the subcontracting and if it is a viable option to look at or if im barking up the wrong tree.

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## Chatmaster

Snoopy_inc

Honestly? Do not even worry about that right now. When your business succeeds, and only then will you know how to handle the situation. Stay where you are if you need the income...

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## Snoopy_inc

Chat it makes a difference.

I would really like to find out about the subcontracting.
So if you know about it please let me know.

Thanks

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## Dave A

Subcontracting - as in he subcontracts work to you as a seperate business?

The *very* first hurdle that leaps to mind is that he can't be your only client.

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## Snoopy_inc

Ye i thought that to Dave.

Isnt it if i do more then 50% with 1 person its not subcontracting?

Any thoughts on how to work on this? or make it workable?

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## duncan drennan

> Isnt it if i do more then 50% with 1 person its not subcontracting?


If the only thing offered is a service (i.e. no products sold) then SARS will consider you an employee (or personal service company) if more than 80% of your income comes from one client. One easy way around this is to actually sell products.

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## Snoopy_inc

Sell products to who? 

Lets say the company sells products to others.  And i subcontract to the current company im working for.  Would that count?  Because that is what i am wanting to do.

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## duncan drennan

Assuming that you are contracting through the new company (and not as an individual) the issue is whether SARS will consider you a personal service company (PSC). The problem (in the past) was that people created companies and then quit their jobs and essentially continued to work as employees but could deduct expenses. All that the company was doing was offering a personal service. SARS closed this loophole.

Go to SARS website and find interpretation note 35 which is all about PSC etc. (I have it but it is too big to attach here).

The main requirement is that no more than 80% of your income may come from a single source when the company only offers services. From what I've understood as soon as you are actually trading in some sort of stock you will not be considered as a PSC. *Check this with your accountant*.

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## Snoopy_inc

Ye this is going to be a problem as my income will come directly from the current job.

The only time this will change is when the new venture starts to make money.

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## RKS Computer Solutions

Snoopy, I found 2 more links which you might want to have a look through...

http://www.work.com/creating-a-great-business-plan-11/

http://www.work.com/resources-for-st...-business-817/

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## Snoopy_inc

Thanks R

Ill look into it.  Still busy with the first phase and have just had a death in the Fam :/  So the creation of the new venture has taken a backseat for the next week or so.

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## RKS Computer Solutions

I'm sorry for your loss Snoopy, please let us know if we can do anything to help.

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## Snoopy_inc

Thanks but not much i can do about it and its part of life.  

I will keep you guys informed as to what is going on with the venture

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## Dave A

> Still busy with the first phase and have just had a death in the Fam :/


My sympathies to you and your family, Snoopy.

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## Snoopy_inc

Well hello again.

Just some information as to what has happened in the recent past.

I found out that the owner had no intention to actually make me a partner... Promise after promise has been made and nothing done about it. (the string along tactic)

I will be starting my own venture within the next month and am finally happy knowing that its a risky move but the right move to make.

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## Dave A

> I will be starting my own venture within the next month and am finally happy knowing that its a risky move but the right move to make.


Welcome to the club of the self reliant - Go for it Snoopy!

I'll be holding thumbs that it goes well. And you know where to find us if you want to bounce any thoughts along the way.

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## Snoopy_inc

Thanks Dave,

PS i sent you a PM when you get a chance review the info and get back to me.

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## Moneymaker

I have only recently joined the forum and Snoopy I could see this point coming where the money partner would do an about turn. I kept wanting to post this after reading many of your posts and of course had to wait to the end...this is what I wanted to say:
There is a simple rule in any partnership....He who controls the money controls the relationship and hence the other partners....

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## wynn

Perhaps now is a good time to post a link I feel will help you, it is for Pete Bowens site http://www.nomore247.com/idevaffilia...ate.php?id=105 I did post it on another thread a while ago and yes if you buy the product I earn an affiliate commission (but that is business isn't it)
Very helpful in that it  sets step by step modules for the different aspects of your business and specialises in setting systems for any employees to follow freeing up your time.
Good luck with your start up

Wynn

 :Wink:

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## Snoopy_inc

> I have only recently joined the forum and Snoopy I could see this point coming where the money partner would do an about turn. I kept wanting to post this after reading many of your posts and of course had to wait to the end...this is what I wanted to say:
> There is a simple rule in any partnership....He who controls the money controls the relationship and hence the other partners....



Thanks for the info.... In the mean time alot has happened.... I ended up leaving that company due to continous promises that couldnt be kept and also started up my own venture.... I couldt be doing better if i tried  :Wink: 

And i am glad i didnt get a partner to team up with.

As far as integrating new business into the current company is going to be the next debate on this topic.

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## Dave A

Good to hear things are going well, Snoopy. Well done.

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