Don’t take 50%, either 51% or 49%

51% - they can’t dilute you, you lose your current pay you are in charge.

49% - you can keep your regular but they can dilute you. You aren’t in charge

50/50 is the dumbest shit ever.

If you are 50/50 and they decide in 6 months to throw 50k in the bank account and you don’t match it they might just offer you 10% ownership and now you still don’t have a salary, prolly working harder than before and you’re broke.

Source: been in bar industry a long time and I see people like you get chewed up and spit out all the time.

This is both a huge opportunity but also a big risk. For starters, you need to look at all of the critical business documents. Profit and Loss statements, balance sheet, leases, bank statements, and on. If you don’t know what any of those are, start doing research. Ideally, you know a competent business owner who can help you with this.

Things to watch out for: debt on the company, expensive leases that have a personal guarantee, relatives of the owner having an interest in the business.

Also, you will need a partner agreement with the current owner. You are going to be ‘business married’ to them and you need to document exactly how the relationship is going to work. Who owns what? How are you paid? What if you want out? For this, you will want some of a lawyers time to draw up a fair one.

Good luck!

You need actual legal, financial, and tax advice. Being granted 50% of a business will likely have some tax consequences important to understand.

50/50 is a terrible structure. Either 51/49, a third partner with a minimal stake (to break ties), or a legally binding decision making process in the operating agreement… and you absolutely must have an operating agreement.

People only sell a business when they are burnt out,the business is failing or there’s an opportunity to make a quick profit. Be careful.This one sounds like it’s barely hanging on.

50%? Why? Because he likes you? That’s an insane amount of equity for any business owner to just let go without some buyout for cash. This at least shows that he doesn’t have good business sense.

I would be extremely wary. Being 50% owner means you’re on the hook for 50% of liabilities. If the company is in debt or there’s a risk that rent will increase significantly and cause the business to go into the red then I’d avoid it.

What does he want for the 50%? Too hard to break down over Reddit. It currently seems to be more of a job than a business. If you are going to turn it around, you want 100% of it. It’s possible the business could be a gem again with new ownership and energy but in it’s current state, it’s just not worth much if anything at all

Are you willing to give up your hourly wages for a cut of profit?

Also - 50/50 is never a good idea. One person has to own more and have the final say.

Look at the financials for the past 5 years and see what your 50% of profit would have been. If it looks good and you are willing to do the work then this could be a good deal.

Make sure that there is a buy/sell agreement and that you have a succession plan in place as well. This saves a lot of headache down the road.

Hell no . Don’t do it. She needs that 7k so badly she is willing to give you half the problems. It don’t work that way . Don’t do it

There isnt such a thing as luck. When you are prepared to take advantage of opportunities, others might see it as luck. And you are prepared when you have the education or experience to do so.

Gross sales of $860K for a coffee shop is significant. Unless the rent is ridiculously high, I have little doubt that this can be turned into a very profitable business. It sounds like your boss does not know what she is doing. She took over a profitable business and made it unprofitable. Then, she offers you half, when you don’t even know what a CPA is. This is going to be a blind leading the blind situation.

Again, opportunity is seized by whoever is prepared. If your boss offered 50% ownership to me, I have the experience and ability to bring this back to profitability. On the other hand, you definitely lack the knowledge and experience to do this. I do not believe this is an opportunity you can take advantage of this current moment.

The current moment is not forever. I wasn’t born knowing what I know, and a hard working person like you is fully capable of learning everything I did. If you have a few months to make the decision, you can try to take some online accounting courses, and basic brick and mortar courses. No, I did not go to school for this. And people who go to school for it are not necessarily qualified to run a business. It will be very different from what you have done before, and you might find you don’t want to do it. And that is ok. But if you find that this is something you enjoy and want to do, I know you will succeed.

Lastly, my guess right now is that the store is overstaffed and you can bring it to 2020 profitability by figuring out how to schedule shifts properly. That is likely the biggest factor, and you’ll have to figure out the rest. If this is something that you are uncomfortable doing, I suggest you do not take this deal.

You should not agree to take responsibility for any of this companies debt.

Why is the current owner just paying g 40k of credit card debt payments? Not a good sign. Using a cc as a stop gap occasionally and paying off right away is one thing, but building up a 40k balance ND not being able to pay it? Not good.

She is possibly just offering you this because the business is failing, and you leaving could be the last straw.

You can do it if you want but make sure you don’t take on any current debt. Look at all the numbers.

See if you can get full financials for the business and get an accountant friend to look them over closely… Would you assume half the liabilities? What obligations (like leases etc) does the business have?

You know a lot about the business but the owner knows more about the actual financial picture. $7k may or may not be a fair price. How much work would the owner do? Would they expect you to do much more while he/she cuts back? You need to have some agreement that covers all these contingencies. So do an initial screen on the financials. Then if it still looks ok, get an experienced lawyer involved to think through the various scenarios and put together an agreement that covers you.

First I want to say thank you to everyone’s comments and advice. It’s helped me more than you’ll ever know.

That being said… after some thinking I believe it would do more damage than good on both parties if I went in on this… if the goal is to bring in more business and how I can be of help

I feel I’m too valuable of an employee to let go …I’m going to propose a full time role with salary and benefits … I take on the day to day tasks, social media , advertising and fulfillment. Also working on getting our cost of goods down and how we can improve the environment of the shop… it’s possible I do not become the only full time employee but this tasks are split with another co worker of mine. We promote one part time employees wage and get them certified for shift lead and have 2 other part time employees if needed .

I’m feeling this is the best solution right now .

LoOk at financials with accountant that had experience with coffee shops. See what she is taking home in pay and expenses. Get an idea of what the business can support. You investing 7k and assuming 50% debt. Not sure about that. You both need to be paid same as well as any bonuses and expenses.

you say the company has been established for 15 years then mention the business was established in sept 2020?

There are normally two scenarios where owners will bring on new ownership.

1. need fresh legs, someone who is EXCITED about the biz who can regenerate the following.

2. biz is in decline and they want to offload it before it hits zero.

It sounds to me like you are situation 1. It sounds like you have a good base following who will bring in enough revenue to pay the bills but you don’t have the cream on top right now like you did before covid. If the shop has been open 15 years I’d guess the owners are 40-60 years old. I’m 36 and I MIGHT have one more good push left in me in business, I can guarantee you I won’t have anymore push left in me at 40+. I’d guess the current owners just don’t have the energy to fire it back up again. It sounds like a decent business that needs some fresh legs, new excited energy! Their options right now are give you 50% or shut it down. You’ve given limited info so it’s hard to say what to do for sure but early signs look good for you!

Don’t take on any of their debt, and set up a plan to be 100% owner in 3(ish) years.