I have started a business, I am incorporated as an LLC, Business plan completed. We have a company that will be the owner of the land and the building. We will have another company that will run the facility. Our investors will be investing in the land and the building part of this business. I would like to get some advise on structuring the investment offer. I know we really can't guarentee any of the investment. But we were looking at a 6% return on profit, plus after the investor are paid their 6% what is left from the profits 50% goes back to the investors and 50% back to the company. The only things that I think the investors should be able to vote on are capital improvements and a change of management if certain things aren't met. The second company will have a ten year lease with an option for another ten. I am hoping to have the investors paid off within the ten years. Any advise?
#1. "RE: Investors and Return" In response to Reply # 0
What kind of business is it? Is it one where you need to own the land and the building? It would be a whole lot cheaper and adventagous (depending on the business) if you were to rent the building and not worry about having to pay a 6% return if things happen to not work out.
Along with the taxes, capital improvments, and daily upkeep that have to go into the property you also have to worry about what to do with the building if some things dont work out as expected and possible downsizing has to be done.
Just a thought.. Oh and if 50% goes to the investors and 50% goes to the company then what goes to you? Is your salary for the next 10 yrs included in the companies 50%. Leverage is the key here. Think about this, how much faster could your company grow if you paid the minimum required to your investors return and the remaining went back to grow you business?
Just another thought..
Many blessings to you business,
Chico Earn 1% **DAILY** Return On Money ?The most powerful force in the universe is compound interest?. Albert Einstein http://asdmarketing.110mb.com
#2. "RE: Investors and Return" In response to Reply # 0
This is going to be a sports complex. We want to be able to pay off investors within ten years. The reason for the land company is so the investors will have something if the facility fails. The other company that we will own also will manage the facility and pay rent. This will cover the debt service, property taxes and insurances. We are able to pay a bit more in the lease and give the investors a dividen or put the money to paying them off quicker. We have an attorney and cpa but I am not comfortable with some of there suggestions. Like the major investors would start another llc within our land company. Or should we sell them bonds