Working with a partner how to handle finances / earnings

[Nadia Majid]

Hi

my friend and i are going into business together- we are putting our skills under one "company" and renting a room in a gym together - splitting the rent.

splitting the rent - that was an easy decision

so now the more complicated

she has more skills than me hence more bookings - more earnings

i have less skills hence less booking -i do only hair and makeup and eyelash extensions - i'm struggling for clients hence empty bookings - paying rent out of my own money.

(she has paid rent out of her bookings im paying out of my own money)

how do we handle the earnings -
my friend keeps what she makes -
and i keep what i make

or do we split the total earnings per week 3 ways
1 - rent
1-toward me
1-towards my friend

also we want to recruit some extra "employees" to provide more services and we would be expecting them to pay us rent...

i'm confused at the moment
any help would be much appreciated

 

[BannerPenguin]

You need to draw up an agreement with your friend or things will get messy. Get a partnership agreement and contract in place.

In terms of what agreement you put in place, it's up to yourselves whether you pay the rent and then take a wage each or if you keep what you earn separate and just split the shop bills. Personally this will probably lead to resentment from your friend so you're best paying 50% shop bills each and keeping your own monies.

Anyone you rent a chair or space to in the salon, you should take 50/50 of the rental income between you in my opinion or just put it towards the rent.

 

[CFBS]

Who are you paying your rent money to? The gym owner?
Are you paying her/him individually?

 

[Nadia Majid]

You need to draw up an agreement with your friend or things will get messy. Get a partnership agreement and contract in place.

In terms of what agreement you put in place, it's up to yourselves whether you pay the rent and then take a wage each or if you keep what you earn separate and just split the shop bills. Personally this will probably lead to resentment from your friend so you're best paying 50% shop bills each and keeping your own monies.

Anyone you rent a chair or space to in the salon, you should take 50/50 of the rental income between you in my opinion or just put it towards the rent.

just in early statges
we agrees to keep our own earnings and contribute 1/2 ech towards the rent.

 

[Nadia Majid]

Who are you paying your rent money to? The gym owner?
Are you paying her/him individually?

paying rent to the gym owner
we are paying 1/2 each

 

[KrisKross]

Splitting the rent in half seems fair to me, as long as you both have equal access to equal space for equal amounts of time.

Personally I'd always choose keeping your own earnings, otherwise your friend is just subsidising you.

It's up to you to keep advertising, looking for new clients and filling your own column.

 

[AcidPerm]

Definitely get a solicitor to draw up a detailed partnership agreement.

I can guarantee that one of you will live to regret it, if you don't.

1. What will you do if one of you gets sick and takes a month off work?
2. What will you do if one of you gets pregnant?
3. What will you do if one of you wants to leave?
4. If you take on additional therapists, who will manage them?
5. What will you do if clients complain about the other therapists work to you and want a refund?
6. What if one of you isn't very organised with bookings and money and wants to defer rent payments?

And lots more questions...

 

[Nadia Majid]

Splitting the rent in half seems fair to me, as long as you both have equal access to equal space for equal amounts of time.

Personally I'd always choose keeping your own earnings, otherwise your friend is just subsidising you.

It's up to you to keep advertising, looking for new clients and filling your own column.

thats what we are doing

the space need to be be made bigger - eg a partition wall needs taking down and the heater has broken so waiting for the owner to sort it out as we are sharing with a third person (uses it on our off days) who doesn't like the room with other peoples belonging in it .... a bit unorganised at the moment but still paying rent though!

 

[CFBS]

Out of interest, why did you decide to become a partnership rather than just stay a sole trader paying rent individually to the owner and negotiate who gets the room when?

 

[Nadia Majid]

Out of interest, why did you decide to become a partnership rather than just stay a sole trader paying rent individually to the owner and negotiate who gets the room when?

we haven't officially become partners just decided to work together and share our rent .... and provide more services to customers as a package rather than individually promote our individual services.. but im feeling a bit left behind now also a few people have asked me about my friends services so if i recommend paying clients to her i feel that i should get a commission from my referral and vice versa

 

[IBUK]

Why do you want a commission? I take it you can't do the treatments that you are recommending over to her.

Sounds a bit like sour grapes that your friend is making money and you aren't.

You need to sort out getting your clients for your services.

50/50 seems fair. Its unfair to expect her to split what she earns with you if you are just 2 people sharing a space. If you were an actual business that may be a little different but it wouldn't be fair that you are not pulling your weight and would just lead to arguments.

Maybe think about adding more treatments to your bow?

 

[Nadia Majid]

Why do you want a commission? I take it you can't do the treatments that you are recommending over to her.

Sounds a bit like sour grapes that your friend is making money and you aren't.

You need to sort out getting your clients for your services.

50/50 seems fair. Its unfair to expect her to split what she earns with you if you are just 2 people sharing a space. If you were an actual business that may be a little different but it wouldn't be fair that you are not pulling your weight and would just lead to arguments.

Maybe think about adding more treatments to your bow?

you're correct --i am feeling a bit of a sour grape.. ive been wanting to to this for a very long time putting effort into it - marketing, social media, looking for a space to rent ....but my clients are not coming... i fee l that makeup and hair clients come for a specific occasion whereas beauty therarpy is constant waxing,facials etc
i will be adding more strings to my bow - money is tight hence the resentment !

i notice from your profile pic your hair and makeup any advice for bringing makeup clients? i will be going to all xmas fayres and promoting with xmas offers and % in reduction ..given vouchers to tombolas..collecting email addresses.. the place i rent the room has a weekly client shoot and our services have been included...

 

[IBUK]

We don't do make up im afraid.

Lashes are definitely busy though.

Stick in there... It gets better.

I think hair is definitely a constant for people. A lot of people have less beauty during the winter months.