How to divide shares

Discussion in 'Growing and Managing a Business' started by mavp, Feb 1, 2015.

  1. mavp

    mavp
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    Hi! I'm new in the forum and a new entrepreneur.

    I just started a small business and asked my siblings if the want to join me and be an investor. The problem is I don't know how our shares will be divided. I just started it last November 2014 gained some customers but it hasn't really generated that much money.

    I wanted to be able to buy good equipment but the money I earned is not enough so I ask them if they want to invest in my start-up business. How should we divide the shares? I've read in some articles that founders should always get at least 50% of the shares and the other 50% will be divided to the investors. Though I know, their my siblings, I take the business seriously.

    At this point, I have already invested a little amount money to buy some equipments to get me started last November. Now, I'm planning to buy more equipment to be able to offer more service. I still don't have enough money, I can only invest, for example 35,000 and they would invest 55,000 each. Is it fair for me to get 50% of the shares and they will get 25% each. As a founder, I'm the one who's gonna do all the work. From product designing, marketing, operations and accounting. A one man team as I'm still a start-up. The investor will do no work.

    I'm afraid that they may perceive it as not fair as I get a bigger share thought I invested lesser money. But I also don't want to feel that I did not get enough share and kills my motivation to work.

    So, I'm asking what the dividing of shares should look like? Is it 50% 25% 25% or maybe 40% 30% 30%?

    I don't know the right way to this.
     
  2. jaynorth

    jaynorth
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    Well I believe in buying 25%, instead of investing in whole sole one share. As different shares need to be brought about, also market study is important in this regard.
     
  3. brickshazel

    brickshazel
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    Well, Fairness, and the perception of fairness, is much more valuable than owning a large stake..
     

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