eCommerce Tycoon

**Quicko** · 11-22-2010, 01:05 PM

I just wanted to ask this question because people has confused me.

We are going to startup a website, actually going to be a local company by it self.

We are 5 guys, and each one has a role, and paid amount of money.

We all have collected up to ($10,657.00).
The rest which is ($14,210.00), we got it as a loan.

So in total we have ($24.867).

I just want to know how to calculate profit based on the following information:

Person 1:

The website is his idea, he's the administrator, and going to be the CEO.. He only paid: ($1,776.00)

Person 2: :

He's one of the marketing guys of our team, and he only paid ($1,776.00).

Person 3: :

He's the other marketing guy of our team, and he only paid ($1,776.00).

Person 4: :

He's the Public relations guy, and he only paid ($1,776.00)

Person 5: :

He's our designer, and he has paid ($3,553.00 USD)

---------------------------

This is the answer that made me open this thread:

The CEO, who has given the website idea, should get the highest percentage of profit, because it's his idea, and he knows best.

If you notice, we have no accountant yet. and we are hiring international freelancer for the website, meaning we yet have no programmer.

So please help me in this, suggestions are so respected.

Is that answer that I've received right? do you have any true life examples?

If you also have books/educational website, about how to calculate profit in such cases... then please mention them for me.

Waiting for your replies, please this is very critical.

**chrishirst** · 11-22-2010, 01:28 PM

Profit is what is left of your turnover after the expenses have been paid

So basically not one of you have any business sense or skills

10k turnover (assuming that's what you mean by "collected") plus a 14k loan does not equal 24k to split between you.

I suggest hiring an accountant and a bankruptcy advisor at the same time, because from the sound of your planning that's exactly where you are heading.

**lynxus** · 11-22-2010, 01:43 PM

Well, You could look at it from a "share point of view"

Person who paid the most, owns the most and gets the most.
They have taken a bigger financial gamble and should be rewarded.

Just because its the CEO's idea, Doesn't mean squat.

I would of had everyones " as a ceo " to sign contracts saying you will get X% of profits and that at some point in the future the CEO can offer to buy shares in the company back.

**Quicko** · 11-22-2010, 04:41 PM

chrishirst

Thanks for replaying, would consider your advice surely.. but don't you have anything else to add?

lynxus

Okay, so it's not true, that the person who has the idea got the biggest profit, regarldess he's CEO or no.

as for what you said: Person who paid the most, owns the most and gets the most.

Well can you please give me the math equation for that so I can know how much everyone should get..

Thanks

**chrishirst** · 11-22-2010, 05:09 PM

What about a percentage for growth?
What about taxes?

And if you can't work that 1,776 is 1/6 of 10,657
and
3,552 is equal to 2 x 1,776 or is 1/3 of 10,657

I don't give much hope for this "business".

unless we are doing your homework for you.

**chrishirst** · 11-22-2010, 05:11 PM

BTW just in case your math isn't up to it

1/3 = 2/6.

**Quicko** · 11-22-2010, 05:14 PM

Why don't you give me an example, we're discussing here.. and anyways we will get a consultant.. but you can give an example.

and by the way, isn't the person that paid most will get the biggest share of profit all time no matter what, I mean regardless percentage for growth?

**Jim Gillum** · 11-22-2010, 05:15 PM

Divide total by six...person five gets two shares..

Hire an accountant...if you even hope to have a chance to succeed....
It is difficult to run a business if you have no business knowledge..
Many great ideas have crashed because no one knew how to make them work..
Good luck...

**Quicko** · 11-22-2010, 05:41 PM

The thing is.. we have good idea on how much i will be getting, but it's all about how to calculate each persons profit.

That's all.

**chrishirst** · 11-22-2010, 07:42 PM

What bit of each share being 1/6th do you NOT understand?

So you have five people investing MONEY and NONE of you have a grasp of basic maths.

My 14 year old son could work out the per capita profit share based on the initial investment value.

If you are one of the "investors" get you money back and walk from the whole idea.

**Feydakin** · 11-26-2010, 01:47 AM

These are the types of things that should be worked out BEFORE you start a business and have them all written down so that you can each refer to the contract you have with each other when, not if, but when things go belly up..

Are you incorporated? LLC? S-Corp? 5 guys just working together on one project? All the money going through one person all of you at different times? Who is responsible for managing the money? Who's bank account? Who's tax ID? Who is making sure that the taxes are being paid? Which one of you goes to jail when the tax man comes knocking?

I've been in business for nearly 30 years and I still don't know how much I will be getting next month.. Could be something good, could be something bad.. We just don't know until next month happens..

You guys have the cart so far in front of the horse that the horse can't even see it..