I am seeking $70,000 to buy a business. The investor will not be doing anything but putting forth the money with no repayment of the 70,000 to him. What percentage of profit do I give him for this investment?This will be paid to him annually as long as the business is alive.
Hi,
There is a lot more that goes into this other than the two lines of information you provide! Lets take this a step at a time.
Your going to buy a business. For how much? How much cash are you putting down out of your pocket? How much is being financed over and above the $70k you want from an investor? What is the current gross income? What are the expenses? On a scale of 1-10, 10 being professional experience what number best describes your experience and education to manage and operate the business?
Is this a service business? Is it manufacturing? Is this business seasonal? Are there existing debt you will take over and service? Is there real property with this purchase? Is it operating from a leased property? Does the business currently have any liabilities? Are there challenges to patents or copyrights? How much working capital is required in reserve? Do you have a budget? Do you have income projections?
Do you intend to operate as a Partnership? An LLC? A Corporation? What is your estimated market? What percentage can you obtain as a percentage of market share? Can you retain and grow that position? What is your potential write off base? What do you project as a net income? Do you have enough reserves to pay expenses until your profitable? Are you planning to pay your self a salary from invested capital?
All of this factors into what you offer and what the investor calculates for risk!
GR