Is it fair?

Discussion in 'Growing and Managing a Business' started by upwardsoc, Jun 12, 2013.

  1. upwardsoc

    upwardsoc
    uix_expand uix_collapse
    New Member

    Joined:
    Jun 12, 2013
    Messages:
    5
    Likes Received:
    1
    Hi All,

    So, I helped a small private construction company jump into the world of government contracts. I wrote a bid package, used my skillset in understanding government and also as the lowest bidder received an award for some work to be performed. My fault in this and has led me to ask for advice is that I pursued this without coming into an agreement as a fair compensation prior to proceeding. After the award, his offer to me is 30% of net profit. Estimated profit is 20-30K depending on his ability to perform. The work is relatively easy and should take approximately 5 weeks. His rationale for not providing a 50:50 split is that it is his liability that is exposed. His equipment used. Plus, he said he will not count that towards the overall expense. So this should be a fair exchange. Thoughts? Is he right?

    My concern:

    I brought him in to this opportunity. I am establishing his reputation. Am I wrong? If so what should be fair?

    Help!
     
  2. Fergal

    Fergal
    uix_expand uix_collapse
    Premium Member
    Premium Member

    Joined:
    Nov 18, 2007
    Messages:
    10,575
    Likes Received:
    1,165
    It's difficult to give a definite answer, without knowing the full details of the situation. However, based on what you have said 30%, to you in return for winning the business seems to be quite generous. Honestly, I wouldn't expect anyone to get paid 50% of the profit from a construction project, solely in return for submitting the tender and winning the business.
     
    • Like Like x 1
  3. TimeRider

    TimeRider
    uix_expand uix_collapse
    Active Member

    Joined:
    Apr 6, 2008
    Messages:
    2,761
    Likes Received:
    416
    I think he is partly right If you didn't come into agreement before. Then, he was to decide what he wanted and what was right. Yes, you brought him to the job but I think you should have talked to him about this and what you wanted because you really gave him that opportunity. So, It's you who gave him profit so you could ask little more like 35% or maximum 40% depending on the amount.

    I would like to suggest that you come into agreement in near future before you do anything because now you don't have a agreement to fight against him. So, I think it's good. 30% isn't bad either.
     
    • Like Like x 1
  4. GeekGhost

    GeekGhost
    uix_expand uix_collapse
    Member

    Joined:
    Oct 5, 2012
    Messages:
    217
    Likes Received:
    96
    I agree with Fergal. 30% is generous given the circumstances and without a prior agreement I think the overall outcome is fair.
     
    • Like Like x 1
  5. iaccidentally

    iaccidentally
    uix_expand uix_collapse
    New Member

    Joined:
    Jun 12, 2013
    Messages:
    5
    Likes Received:
    2
    I hope you don't mind a new member weighing in...But interesting issue.
    first I think he and his crew will establish his reputation (in the quality of work they do), you helped provide them the opportunity to establish their reputation. (what if they do a bad job? will you take the blame? lol)
    But I would agree that that 30% is a good amount, unless you will be out there working with/managing the construction crew.
     
    • Like Like x 2
  6. daytrader

    daytrader
    uix_expand uix_collapse
    Active Member

    Joined:
    Jul 29, 2009
    Messages:
    1,678
    Likes Received:
    216
    Each one must give as he decided in his heart, not reluctantly or under compulsion.. Corinthians lol.. 30% I think is a bit fair.
     
  7. upwardsoc

    upwardsoc
    uix_expand uix_collapse
    New Member

    Joined:
    Jun 12, 2013
    Messages:
    5
    Likes Received:
    1
    I get what you're saying... in my head. I am usually in control. The money is important to me but secondary to what it really represents. In my competitive mindset it is hard to swallow the fact that I'm in a weaker position. I will check out what it says too in corinthians! Thanks.
     
  8. AnushaJain

    AnushaJain
    uix_expand uix_collapse
    Active Member

    Joined:
    Apr 7, 2013
    Messages:
    2,006
    Likes Received:
    355
    If you haven't go for any type of agreement before,then its not an issue,you can't demand for anything as the written documents are only the proof.So i think you should go for 30 % and now be updated for the next time about all the formalities before any deals.
     
    • Like Like x 1
  9. Constantin

    Constantin
    uix_expand uix_collapse
    Member

    Joined:
    Jun 20, 2013
    Messages:
    213
    Likes Received:
    86
    Do you happen to know how much a third party would have normally charged them for the same services you offered?
     
    • Like Like x 1
  10. alicemenezes

    alicemenezes
    uix_expand uix_collapse
    Member

    Joined:
    Oct 18, 2012
    Messages:
    86
    Likes Received:
    4
    I agree with Fergal, 30% seems pretty fair.
     
  11. thealchemist

    thealchemist
    uix_expand uix_collapse
    Banned

    Joined:
    May 29, 2013
    Messages:
    67
    Likes Received:
    9
    I'd have to agree with Fergal, without that initial agreement, 30% is a very generous. However, look at it from a different angle, taking 30% now may not seem fair, but this may help to establish a possible partnership in the future. If more contracts are to be obtained by the other individual, he may request you help, there by giving you the opportunity to create an agreement which will lead to more profits for you in the future. I'd say, at this point, trying working on establishing a very good business relationship with this person, because it will more than likely lead to more jobs in the future and more money in your pocket.
     
    • Like Like x 1
  12. FIBC

    FIBC
    uix_expand uix_collapse
    Member

    Joined:
    May 22, 2013
    Messages:
    68
    Likes Received:
    0
    I want to suggest you come into agreement in near future before you do anything because now you don't have a agreement to fight against him. As a result, I think it's good. 30% isn't bad either,acceptable.
     
  13. upwardsoc

    upwardsoc
    uix_expand uix_collapse
    New Member

    Joined:
    Jun 12, 2013
    Messages:
    5
    Likes Received:
    1
    I understand your point of view. But, the issue is power. If he is bringing projects to me that's fair. I agree with you. But that isn't the case here. I am bringing them to him. I am building his company from scratch in this area. So, do I leave a 3 year relationship with him based on a difference of 10% of what I feel I should get more? What do you think about this rationale?

    Am I wrong, selfish, if so, how should I let go and be positive?
     
  14. upwardsoc

    upwardsoc
    uix_expand uix_collapse
    New Member

    Joined:
    Jun 12, 2013
    Messages:
    5
    Likes Received:
    1
    5-10% for filling out applications. But this is more than that. I've seen third party go as high as 50:50. My partner says 30% is fair because he is not going to count equipment cost, b/c he owns them, towards the net profit. The equipment here is using one truck.

    I have no choice but to swallow 30% but I still feel 40% is more accurate. This deal would never have been born without my influence, knowledge and relationships. I guess the 10% could account for is equipment which is rather shaking logic to me. But what about the other 10%? He is taking out insurance and other ancillary expenses from the profit.

    What do you think? Would you leave a 3 year partnership over this?
     
  15. Fergal

    Fergal
    uix_expand uix_collapse
    Premium Member
    Premium Member

    Joined:
    Nov 18, 2007
    Messages:
    10,575
    Likes Received:
    1,165
    upwardsoc a question worth asking yourself is, could you partner with a different construction company and get a higher total revenue from the completed projects? If you could, then see if you can work with one of them. If not, try to be happy with the arrangement you have and build on the relationship as much as possible, for your mutual benefit.
     
  16. platnumcn

    platnumcn
    uix_expand uix_collapse
    Member

    Joined:
    Jun 16, 2012
    Messages:
    110
    Likes Received:
    8
    I believe that business is never fair and you should not bring in such emotions while doing business or people will end up using you. The concept is simple, irrespective of what your role is in the deal, if 50:50 has been decided, there has to be a reason. Even in case he is dumb, he will not let anyone go home with such ratio, if there is no importance of that individual at all.
     
  17. Redyfox

    Redyfox
    uix_expand uix_collapse
    New Member

    Joined:
    Jul 8, 2013
    Messages:
    4
    Likes Received:
    0
    Agree to devilbatista, it is better to make prearrangement if you want to make sure you'll get something. And yes, 50% - it's too much, I think.
     

Share This Page