Anyone here own multiple businesses, and have different partners in each of the businesses? I am at a bit of a crossroads with two of the businesses I own. Details below, and responses appreciated!
I own one solid business that can eventually finance other ventures, and which may ultimately synergize with the other businesses involved. Quick background regarding one of my businesses:
-Martial arts gym, started in 2006
-Little growth (up to 35 members) by 2009; merged with my business partner around that time; neither of us took marketing or growth too seriously
-From 2011-2012, we tripled in size from 35 members to about 140. I took growth very seriously during this time.
-From 2013-2017, we've found a sustainable growth rate, and we've grown to over 350 members today (and our other KPIs look good, including average tuition, churn rate, etc).
This is a well liked, extremely well respected business that is profitable and sustainable. It is, to put it another way, a potential "golden goose."
The first offer:
I'm currently in a 50/50 partnership with my friend (we merged in late 2009). Together, we run the aforementioned martial arts gym. I've found that I am much, much more interested in constant self-improvement and reflection, general energy levels, and the types of things you'd consider to be "business ownership" things (EG, my partner still has a full time job; I focus 100% on the business). Unfortunately, I do not believe my business partner is cut out for business ownership. There's really no delicate way to say this, except to stress that I am getting many, many more times the things done than he is getting done.
In the process of running our business, we have discovered one superstar employee who is willing to handle most of the day to day operations, and he does them well (and, more importantly, is willing to learn). I also have another potential partner, going forward, who has tremendously more business experience than me right now, having exited several companies. He is forthcoming with information, even if I have zero intention of making him a partner, so he has been a valuable resource to date.
My current thought process is to value the business at about $750,000 (for reference, we are hovering around 25% profitability; we're subscription-based; and we are growing around 15% a year).
I'd like for investor 1 (the key employee) and investor 2 (the experienced business owner) to invest $112,500 for 15% ownership, and I'd like to further buy in with $75,000 of my own money to add 10% to my shares, giving us this ratio:
-Me: 60% ownership (additional $75,000 invested for additional 10% stake)
-Key Employee: 15% ownership ($112,500 invested)
-Business Owner/Mentor: 15% ownership ($112,500 invested)
-Original (other) partner: 10% ownership (paid out $325,000)
I would be happy with any variation of the above numbers that leaves me 100% in charge, and owning more than half of the company. I'd also like to have a buyback option, where I could buy back the shares from any of these employees at the amount they invested plus 7.5% (that way, they at least get a return on their investment, should I decide that I prefer not to have them involved as owners). I see this newly restructured company as much more akin to a holding company, which brings me to a second potential opportunity:
A friend is selling his business, and we might have the opportunity to invest. This business is smaller than ours, but profitable (I have not yet seen the books, but I've been involved with this other gym since its founding over 15 years ago). I think I could get it for a fair price, as the owners are motivated to make an exit, and they trust me. The premise would be to own this second location, and do a "proof of concept" of sorts, to prove that we can create an equally successful second location based on the strategy and tactics of the first location.
After that, the sky is the theoretical limit.
I also have a couple of tangential projects that might not always stay tangential - a video site that compliments any and all gyms I/we might own, and also might generate its own separate source of revenue (subscription based video), and a grappling tournament circuit I currently own 40% of.
Anyway, I hope this story makes some sense, and what I'd love to hear is a sanity check of sorts. Do you think this is a good play? Usually I'd ask the business owner/mentor type, but since I'm planning to make this offer to him, it seems like going outside for some mentorship might be a good idea. I'm also very happy to listen to other longer term thoughts with regard to the holding company concept as a whole. I see this very much as a foot in the water, and plan to go very, very far with the company.
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