Thought Id start this one going because its rather dead on this board at the moment and I suppose all my usual muckers are either at the Stella tennis event watching Dim Tim (lose again) or at Henly Regatta eating cucumber sandwiches (they wish,...NOT).

Anyway please feel free to just talk to yourself blast away and let it go on any company or subject you wish. Just wish Id thought of this one before.

cheers GF.

Hear hear Greek.

Sorry Greek, I repent and will not engage Fred anymore regardless of how mischievous my typing finger is feeling.

The threads all yours, your posts make interesting reading.

Birds of a feather flock together.

8-)

No Fred, i'd rather read Greek's postings than yours. Simple.

Raw,
Cure for itchy finger - squelch.

Am buying a minibus for my brother in law in the Philippines for about 2,200 he will be running a bus service from the town to the city . He will be running the business and i will cover all the cost.

Question is , if i give him a percentage of the net profit's what percentage shall i offer him ?

Are you going to employ him then share profits, or simply share profits? If it's sharing profits I'd say you need a return on capital invested at whatever rate you decide, per annum split monthly (say) then small share of the profits, OR simply collect a share of the profits - you put up the capital, he does the work.

What a largely truthful, factorial and well constructive post Fred (10485)... with no personal abuse to others on here.

Aldwicck I would presume that you would want to get interest at commercial rates for your loan to the business and your in-law his wages at local bus driver rates. If the business can't pay these items after a start up period on say a year then it is not viable. Profits can then be split between you both on the basis of investment - your cash and his wages.

I was going to suggest that Alders should be charging interest on the loan to cover the bus and other startup costs, but Timbo looks to have beaten me to it.

Only 2.2k for a bus? Does it have pedals instead of an engine or something?

If someone were to loan me money to run a business and the deal was that his return was 'a share of the net profit', I'd see to it that there weren't any net profits at all.

I'd look at my gross profit and stick some unnecessary extras in to run the net profit down to zero.
.........................
As an aside, later on in life I found out that:

Just because you are related to someone, it doesn't mean you have to like them.

Using the same sort of rough guide-line., just because you are related to someone it doesn't mean you have to trust them.

Also, Business and Friendship don't mix.
.....................................
If it were me, I'd do a deal where he logs down his daily takings and tells you what they are once per week. I'd also ask him to similarly tell you on a weekly basis what his mileometer reads.

Then I'd do a simple deal with him where you take a percentage on his weekly takings.

To start with, he might not cotton on to the fact that he can cheat you by declaring lower takings. When he does get wise to this, you can look back at your previous records and see how things are trending.

Basically, your return on the bus and any other capital outlay ought to be around 8-10% per annum if it's a for a family member (IMHO) but you can go up or down on it to suit yourself.

Thus, I'd work out a few bits of arithmetic on the back of a fag packet to see what you get with different scenarios of weekly take and weekly mileage. This should hopefully correlate pretty much with the 8-10% return you are looking for on your outlay.

Perhaps you might feel that 20-25% might be nearer the mark? I hope not. As we are talking 'the Philippines' here, I do think that's a bit too much. These guys need all the help they can get.

Thanks for the input , just like to add that it was my wife's idea so that she had an income to support her family over there.

My idea was to give him a share of the net profit's , i have been told anything from about 20% to 40% , and been told it was more of a bank loan then a business partnership and 20% was far to low for him.

btw ... mini van's , fuel and labour are cheap over there .

To sum up , first i do trust him. And if i have read the advice correctly i should charge 8 to 10% on the start up cost's, paid monthly i would perfer, then when the start cost is repaid do a profit shareing deal

If someone were to loan me money to run a business and the deal was that his return was 'a share of the net profit', I'd see to it that there weren't any net profits at all.

I am glad that I will never do business with you.

Aids

10% percent of capital loan, if you wish tied to bank rate changes.

But, with the allowance that the loan can be paid down and the rate of "interest" remains the same on the outstanding loan.

That would prevent him to beholding to you.

Also, allowance could be allowed for start-up costs.

Personally, if I reached such an agreement with a family member, I would settle for a unpaid holiday and repayment at a date opportune to them.

But, I am tight with money.

I will ask him how he would like to pay back the loan ...... cheers Fred

Why not reinvest the profits into buying another minibus. If you are not in a hurry, you might end up with a bus company.

That might be an option . the thing is out there what business we can do at our local post office they have to go to the city over 2 hour's by road.

Alders,

In all seriousness, I'm actually anglo-Indian so I do know a little about how they live out there and their level of expectation.

If you can afford to lose and completely write-off the 3k or 4k that you're talking about to get your wife's family on their feet, I'd just give them the money and tell them to make sure they look after you when you come to visit. I'm sure they'll treat you like royalty under those circumstances.

Otherwise, if you're the sort of person who can't afford to lose that sort of money and you'll be having sleepless nights worrying about your return, then just forget about it completely. Apologise, they'll understand, and just tell them you don't have that sort of money to hand and walk away completely, otherwise it will end in tears.

There you are, you see. Because of his stupid comment above to me, Fred and I have already fallen out with each other. And we aren't related and I am not even lending him any money. :-)

I agree with Hilary. Either 'gift it' or 'forget it'. Anything other than a straight gift, simply wouldn't work. You just can't guarantee the business would work and so imagine the implications of that circumstance. If you gift it to them and it does work, they just might feel patronised and beholden to you.

Business and friendship as a mixture just doesn't work.

Hil's

I spent 5 month's out there this year , Manila [ marikina ] and Cebu.

aldwickk: I agree with Nick Exec.

I've been in a position where a 'percentage of the net profit' was proposed. I rejected the deal with the words - so how will you feel when I arrive in my corporate Ferrari to give you your cheque for 17? Instead of lasting a profitable 5 or 6 years, my deal wouldn't have made it beyond 12 months.

Consider taking a percentage of the gross after certain agreed fixed deductions (input costs, agreed wages and overheads). You'll have to trust the books, of course.

On edit: Having re-read Hilary's last post, I reckon there speaks great wisdom. That's the best advice, given the amount of money involved.