I'm starting a small online apparel business with a good friend. But I'm having trouble finalizing the partnership agreement. It is a little complicated for me now because we are both investors and involved in the operations. Let's say the scenario goes like:
Capital: I put in 70% of the capital while she puts in 30%.
Job scope: I'm responsible for the overall operations from sourcing, importing, production of the product images to getting online, posting out and tracking of all expenses, sales etc. Basically I would say I'm working as the shopowner.
Her scope would mainly be involving in the product selections and modelling for each collection, which for a start could be a once in 2-3months occurrence. Only if the shop takes off, the frequency of the shoots might increase. She will also suggest on some marketing but execution should still involves 2 of us.
My question is how should I structure the profit sharing ratio? We are both not drawing salary for our scope of work because we are starting up. Initially, the suggested ratio is still a 7:3 ratio based on our investment ratio. But after thinking through, I thought it is a little strange that I'm the "major" investor and I'm also the sole operating person to maintain a 7:3 profit ratio? Does it make more sense that perhaps the ratio is adjusted to 8:2 , meaning I will get 10% more for the additional efforts? Could somebody enlighten me on this? I'm so confused on how should I come up with a fair ratio to both of us. It's a little tricky with good friend... I don't want the trust to be affected.
On a side note, I have no problem putting in 100% for the capital. It's more on the job scope that I wish to recruit 1 more partner.