Post: #1

Buddy looking for an investment of 5000 into a landscaping company. How much should I be asking for in return (%). Also, how do you keep tabs on something like this? He's a good guy but he's a state over. Any input appreciated

Post: #2

How much is the total investment in the business? What fraction of that is your 5000? That should give you an upper bound for the percentage ownership to expect if you want equity. If your friend has some kind of trade secret or a lot of good contacts that increase the value of the business beyond its physical capital then you should scale back your equity percentage appropriately.

Bascially:

Your equity % = 5000/(5000+value of business without your money)

If you're talking about debt, then it gets a little trickier. What ROI would you get from lending to a similarly risky business? It may be hard to figure that out but it's a good starting point.

Post: #3

I'd also recommend getting a lawyer to do paperwork so all parties involved are protected with debt, ownership, etc.

Post: #4

I'd be careful about this. You risk losing the money and a friend both at once.

Are you looking for something invest in?

If so, there are probably more sound investments to make. Unless you have some reason to think your buddy is a really good businessman and have no doubt he can be counted on to pay the money, I'd walk away from this.

$5000 isn't that much money. If he was good with money, I feel like he could save that up himself in a relatively manageable amount of time.

Or is he just short the $5K?

Beyond All Seas

"The individual has always had to struggle to keep from being overwhelmed by the tribe.
To be your own man is a hard business. If you try it, you'll be lonely often, and sometimes
frightened. But no price is too high to pay for the privilege of owning yourself." - Kipling

Post: #5

You don't.

He's out of state, you won't be able to manage, too much risk, axe this deal.

(05-11-2014 10:27 AM)nek Wrote:  Also, how do you keep tabs on something like this?