Business question for you all

[mudshark]

I need an opinion on something. I am in the process of buying an established billiard hall and I need an investor for the remaining amount of money. So this is basically what I have come up with for a proposal for a perspective investor.

I need $170,000 to close this deal. I have come up with the remaining $575,000 for the business. I thought that it would be fair to an investor to either make a investment loan for him that would be for 5 years at 6% interest which would come out to $3268.68 a month, plus an additional 10% of the profits which would be an additional minimum of $1,000 a month. for a total return on investment of between $87,194.80 and $152,194.60.

Or I thought about a 10 year agreement for 23% of the profits for 10 years, for a total return on investment of between $106,000.00 and $405,000.00.

Please let me know if you all think this is fair and equatable for an investor.

Thanks,
Rob

[Doctor_D]

Good morning:

Investors fall into Two (2) categories; Active, where they will bring their expertise to the table and contribute to business operations or Silent, where they will trust the operation of the business to your management team and take the return they are seeking from their investment.

What is fair for your potential investor is dependent upon what the investor is seeking. I have worked with numerous investors over the previous Ten (10) years and they all share the same goal; earnings in excess of 10% and upwards of 20%. The safer the investment, the greater the likelihood for profits and success, the lower the rate of return and a small percentage of "Ownership". The riskier the investment, the higher the rate of return and much higher percentage of ownership. Once you locate a viable investor, the investor, once they have reviewed your business plan, budget, forecast and revenue model, will tell you what they want in exchange for their money.

Should you wish to discuss this in greater detail, please do not hesitate to contact me directly. My contact information will be found with-in my CCB profile.

Good luck with your room...


Dr. D.