From a back of the envelope plan… to the £1,000,000 man!
A new client approached us with a back of the envelope business plan – he was going to leave his employed position and set up in business in the same industry for himself.
This is a route taken by many entrepreneurs and with many years experience under his belt and a track record of achievement in his position as an employee we could see no reason why he couldn’t make a go of it. So we were very intrigued when he told us that he intended to take on a friend as a business partner.
Our intrigue turned to concern when he told us that his proposed partner wasn’t going to be contributing any capital to the business.
We pointed out that as a business partner his friend would be entitled to half of the profits that the business made each year AND half of the value of the business when it was eventually sold … even though he was taking none of the risks.
“Why do you need a business partner?” we asked him bluntly
He admitted that there was no rational reason other than ‘over a beer it had seemed like a good idea’ and if he was honest he just didn’t feel confident enough to do it all on his own.
We counselled him against taking on a partner and advised him that the best thing to do was to set up his business as a limited company with him as the sole shareholder, then employ his friend and pay him well for his contribution.
He took our advice – he was a smart and very capable guy and his business grew to be worth £1,000,000 and along the way he amassed a property portfolio worth over £2,000,000 – and he kept all of it!
This is one of just many instances where our ability to offer our clients a rational perspective has enabled them to make better decisions that ultimately have had a significant effect on their wealth.
To find out how our proactive advice and entrepreneurial ‘can do’ attitude could help you to grow your business, have an easier life and keep more of your hard earned money... contact us today!