investing in my girlfriends new business , What return should i be expecting?

J

johnoneill

Guest
Hello.
My girlfriend is opening up a small beauty business with forecast turnover of 65000 euro in the first year and 90000 in the second .I am giving her 6000 to start with ..What % of the business should i be getting and what return should i be expecting . Any useful info in starting a new business as this is my first time .
Thank you .
 
How much is she putting in to start up?

BTW, you will probably get a pile of smart answers on the possible non-financial returns you can expect!
 
There are too many imponderables to cover everything here - talk to your accountant.

Maybe perhaps a loan to the business, with a personal guarantee from your g-f might work best - then you can charge maybe slightly less than the banks and she can benefit by not having to pay you a huge % of her profits, which are likely to be minimal (if any) in the first few years.

Get it all in writing, backed up by a proper legal agreement whatever you do.
 
It sounds like there is no business plan in place and no agreement as to how the business is to be organised, funded and owned. I suggest you hold off making any commitments in relation to "giving" any money to your girlfriend until she seeks professional advice and comes back to you with proposals (supported by an appropriately detailed business plan).

Unless you know the funding requirements of the business over time and whether your 6,000 (or whatever number) purchases equity in the businees, is a personal loan to your girl-friend or a loan to the business, neither you nor she are going anywhere on a buinees front and this may result in damage to the personal relationship as well.

I think the whole idea as mooted in your post above is a very bad one and destined to fail.
 

Very sound advice which you would do well to listen to.
 
I would suggest that you give her a simple interest free loan. The amount is too small for an equity share in a business. It is also too small to be asking accountants for professional advice. It is also too small to be risking your relationship over.

Give her a loan.
Get her to give you a cheque post-dated so that there is no doubt that it is a loan and not a present or an investment.
 
I agree with Brendan's advice as this is such a small amount of money.

Just give her a loan, make sure you both understand it's a loan. Don't loan it unless you are prepared to lose it, if you are not prepared to do this than you should not give her the loan.

As an alternative to a post dated cheque you and she could word a simple document saying x loans y 6K on x date and will be repaid by y date, signed by you both - to keep things on a clear financial status.
 
Bronte said:
As an alternative to a post dated cheque you and she could word a simple document saying x loans y 6K on x date and will be repaid by y date, signed by you both - to keep things on a clear financial status.
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That is what I would have said until a solicitor suggeste, in another case, the post-dated cheque idea.

There is no argument about the interpretation afterwards. The lender does not need to go to court to prove it was a loan. There can be no dispute that the lender did not adhere to the agreement.

The cheque is such a simple idea.
 
You are mixing business with pleasure.

Therefore I would not look for an equity stake of the company as there is very little value in it for you. So as suggested just agree on how much she is to repay you and by when and get that in writing.
 
Personally I don't like the idea of a post dated cheque, not unless it has been tested in court.

You could have the situation where it was a loan initially, with a post dated cheque, then it was written off by boyfriend as a gift with no proof and boyfriend keeps cheque and they split up acromoniously and comes looking for the money. I think it written on a piece of paper is far better as the intentions are clear.
 
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