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Thread: How to split it 3 ways

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  1. Question How to split it 3 ways 
    #1
    Join Date
    May 2012
    Location
    Noblesville, IN
    Posts
    28
    Long story short I have been running and financing a haunted house called Barn Of Terror in Noblesville for the past 4 years now. We hit up to 2000 visitors last year. I now have a few buddies that want to put a little money into helping finance the haunted house but I dont know a good way to then split the money 3 ways when we are done. last year I put $2000 into it and made $4500 out of it. But this year we are running more prime nights so i am estimating we can get almost double the visitors. I dont know how much the other two want to put in, but how would i end up splitting the profit? any suggestions would help THANKS

    ~BOT
     

  2. Default  
    #2
    Join Date
    Nov 2008
    Location
    Mesquite, TX
    Posts
    2,788
    My advice is to not split it. Do you need a partner? can you afford to finance the haunt yourself?
    Perhaps their is another aspect they can invest in like concessions or parking? If you need help get it- if you do not then do not.
    If you do split it then agree on an amount each will put in and divide the profit up by the same percentage. you put in another $2000- then they each put in $2000 then you would each get 33.333% of the profit.
     

  3. Default  
    #3
    Join Date
    Dec 2011
    Posts
    613
    Quote Originally Posted by BarnofTerror Noblesville View Post
    last year I put $2000 into it and made $4500 out of it. this year we are running more prime nights so i am estimating we can get almost double the visitors.
    First question (and this is important) . . .

    After having spent $2000, did you gross $6500 and net $4500, or did you gross $4500 and net $2500? That distinction would be very helpful in answering your question.

    Suffice to say for now, however, no matter how you look at it the numbers don't add up.

    Assume the best case scenario, that you grossed $6500 last season, making $4500 net, after having recouped the $2000 you spent. And let's assume you are still potentially doubling that money next season, netting $9000, by bringing on these 2 partners.

    Well, if bringing on 2 partners helps you double your money next season, then instead of $4500 "split one way", so to speak, you'll instead have $9000 split three ways, giving you $3000 each.

    So, you managed to double your attendance while at the same time cutting your profits by a third, going from a cool $4500 down to the more tepid $3000.

    If we go with the other scenario, with you (and/or your potential partners) investing $2000 and only grossing $4500, leaving a $2500 net, then you would instead have all three partners investing some $6000 total, grossing $9000, netting $3000, which would mean only $1000 for each partner.

    Now, would your new partners be silent partners; or are they going to be working on the haunt as well - a veritable band of brothers - swinging a hammer in the trenches along side you? If the latter, then unless they are total nuts-out haunt enthusiasts, they are probably going to be wondering why they spent all those countless hours working on this awesome haunt, only to get paid something like minimum wage after you divide their $1000 between the countless hours they spent.

    Another factor to consider is this: Are you starting the ledger at zero, with each of you contributing an even $2000, or whathaveyou, and then splitting the net three ways, or are you factoring in all your personal past work, and the actual value of the haunt, as an example of your prior investment? Iow, if the Haunt represents, say, $2000 worth of invested value, you are investing an additional $2000 of value in cash, for a sum total of $4000 of invested value, and then your two partners invest their combined $4000, then technically, aren't you equal with them, and deserve not a third but a half of the net?

    After all, it was you and not them who built it into what it is now. Doesn't that count for something?

    *****

    Now, interestingly enough, I get the sense from your question that perhaps bringing on the two partners might not actually be key to doubling attendance for next season, but that the two factors are indeed incidental, so you might stand to make and keep the $9000 for yourself by making the improvements yourself. If so, what was the main reason for bringing them on? Was it financial, as your question somewhat suggested, or was it just because you wanted to work with your friends, which admittedly is an enticing reason in many cases.

    Before you ever go into business with your friends, these are usually good questions to have answered, at least for the sake of clarified expectations and for the sake of not damaging important relationships.

    In that regard, Allen is right. If they want to get in on the act, they might do well to provide some sort of auxiliary value that works for everyone's benefit and improves everyone's bottom line, such as concessions or parking.

    This would also allow you to see what kind of workers they actually are, and how entrepreneurial they are, which can help inform your decision on a more equitable partnership arrangement next year.

    C.
    Last edited by BrotherMysterio; 05-09-2012 at 11:51 AM.
     

  4. Default  
    #4
    Join Date
    Nov 2011
    Posts
    540
    I'd like to put in my few cents worth. First off, I've been paying close attention to Brothermysterio and he's actually helped me out quite a bit. He makes a lot of sense. My thing is this, I have 2 partners. One being my wife, the other being my brother. My brother and I have done business before and only ever had one problem, which is a disagreement that will always stand, and it's under the bridge. My brother is helping with labor. He's disabled and really shouldn't be helping me as much as he has been, but he's a big s.o.b. so i think I'll let him do wtf he wants lol. He doesn't want money, at least not now. His best interest is what's good for the haunt.

    My wife? Well forget her, she's got dishes to do! I'M PLAYIN! lol, but seriously, we can't consider her a partner. With that said, I have an investor that is interested in helping me as well, but so far, it's all me. We're selling our lan... SOLD our land (closing tomorrow in fact) and also selling our 67 Camaro SS and investing everything into this haunt. If all this does is pay for rent, WE'RE GOLDEN! We have a house onsite, and an apartment in the building. So if rent's paid, and utilities are paid, and we can make most of our props... YTF NOT do this?

    Had I had a real partner, buddy or not, that's investing thousands, and going to want a return quickly, I'd have to say no. I did an investment with my airbrushing and expected to get my investor a return inside of a year. I'm having trouble keeping it going due to many reasons and he's understanding of the situation. So now we're shifting gears to the haunt. It's less stressful than me trying to do 300 shirts in 10 hours with CTS and nerve damage in my elbow, not considering the 2 bad discs I have in my back that's JUST NOW getting managable.

    If your friends are wanting to invest and build the haunt up BEFORE trying to reap profits, I'd say go for it. If they're wanting to make quick cash, tell them this isn't the scheme for them! It's NOT a scheme! They have to understand this. I just had my 2nd quote for sprinkler systems. After being gauranteed no more than $20k for our system, he came back and said they forgot something and can't keep their word, they did however say that they would do so and so for free, which is worth a few grand, but still... they're new quote? $37,000!!!! And that's NOT even getting the 4 inch pipe to the building, which can cost 10's of thousands.


    Just be sure to let your friends know this... "Make no mistake, this is NOT a get rich quick scheme. To do anything, is worth doing right. " if they want to invest their lives into it, great, I'd say work something out, but only you know your investors, we don't. If they sound like they want a quick buck, turn them down.

    This is only my opinion. My background story, I felt is worth mentioning to let you know the situation I'm in. It may not help, but here's just another view from the field and sideline.

    Good luck to you and keep it up!
     

  5. Default Many thanks 
    #5
    Join Date
    May 2012
    Location
    Noblesville, IN
    Posts
    28
    Thank you to all 3 of your responses. I am very pleased to get a quick response and a new perspective on this. I did net $4500. But I see with the numbers you crunched for me (THANK YOU) it would not be wise to bring on 2 extra people but maybe only 1 extra person. The only reason I had this thought was to bring more money to start with to the table aka get newer better stuff! The one that is really interested in helping out has a passion like me for the haunt not to just make money. That might be the person I go with. Once again thank you all!!


    ~BOT
     

  6. Default  
    #6
    Join Date
    Jul 2010
    Location
    Hartford CT
    Posts
    770
    If only one person what do they bring to the table beside money? For that low amount try just getting a bank line of credit then you retain full control and full profits as you grow and the bank only wants the principal back to be happy.
     

  7. Default  
    #7
    Join Date
    May 2012
    Location
    Noblesville, IN
    Posts
    28
    Quote Originally Posted by HauntedPaws View Post
    If only one person what do they bring to the table beside money? For that low amount try just getting a bank line of credit then you retain full control and full profits as you grow and the bank only wants the principal back to be happy.

    They are wanting to help with the building/running/clean up. Which since I have done it all myself with a few help from volunteers every now and then, it will be nice to have another solid person dedicated to it. And i would think he will put 110% in esp if he has money ridding on it right?
     

  8. Default  
    #8
    Join Date
    Dec 2011
    Posts
    613
    Quote Originally Posted by BarnofTerror Noblesville View Post
    did net $4500. But I see with the numbers you crunched for me (THANK YOU)
    Glad to be of service.

    Quote Originally Posted by BarnofTerror Noblesville View Post
    get newer better stuff!
    Longer response forthcoming, but before you go down the "newer, bigger, better stuff" road, make absolutely sure that your Haunt doesn't need, first and foremost, The $4 Fix.

    Better to risk $4 on a brand new, bigger, better Haunt, than $4000.

    C.
     

  9. Default  
    #9
    Join Date
    Nov 2011
    Posts
    540
    May I ask, how many nights did you run? What was your door price?
     

  10. Default  
    #10
    Join Date
    May 2012
    Location
    Noblesville, IN
    Posts
    28
    Quote Originally Posted by Frightener View Post
    May I ask, how many nights did you run? What was your door price?
    We only ran 26th - 31st. But i had more business on sat than i did on wed thur sun combined. So this year we are running on prime nights FRI SAT Oct12-13, Oct 19-20, Oct 25-27 (25th kids night) then Oct 31 so 8 nights. We did $5 per ticket last year it was a haunted barn plus hayride. Barn lasted about ten mins hayride about fifteen min. BUt we made 6 people wet their pants so it was pretty scary

    ~Ryan
    BARN OF TERROR
    www.barnofterror.us
     

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