First Time Possible Business Owners seeking investment feedback, consulting charges, etc

Discussion in 'Professional Catering' started by rebeccaa, Feb 25, 2013.

  1. rebeccaa

    rebeccaa

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    Restaurant Manager
    My husband and I (both long term restaurant professionals- Executive Chefs & GMs) are looking to go into business with a couple of partners who already have an established successful restaurant that I work at. 

    We would be investing about $15-20K upfront and are looking to define sweat equity and consulting services.  Since we won't just be investors, we will be involved in the day to day operations of getting this place launched, we want to know what $ amount to put on our services.  Menu design, costing, recipe books, SOPs, the list goes on and on.  We would also be doing staff training, POS programming and ongoing support with operations including marketing, specials, on going training, hiring and other human resource types of things once the business is open.  

    The sweat equity we are thinking of is me taking a pay cut at my current job (about $20K cut) and putting that money towards this new location.  How would that type of investment be tracked?  How are investors paid out?  Any thoughts would be great appreciated.  BTW the company would be an S corp, so any feelings on that vs an LLC would be great as well.  Thanks!     
     
  2. ed buchanan

    ed buchanan

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    Culinary Instructor
    If it is an existing and as you say successful place, why then do they need you??
     
  3. wonderdogrusty

    wonderdogrusty

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    Professional Caterer
    I had taken on partners years ago- a husband/wife team.

    Both my attorney & my accountant cautioned against it.

    I did it anyway. Bad move.

    After 4 years of the duo not living up to the contract- we finally bought them out. They ended up doubling their money after the 4 years, also while being employed at the catering business. I should have just hired a general manager/cook.

    You think you know people. This guy was our best man at our wedding years many years prior.

    Also, as mentioned earlier, if all is going well at the restaurant, why are they looking for partners?

    do you have access to all books?

    All dividends equally distributed? contact your attorney to look over Everything before you sign on the line.