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welcome to Markus GTV I'm chef Marcus Julian on a chef on a mission today's mission is how to set up a business partnership how to set up a restaurant business partnership specifically first off head over 250 mistakes calm 5-0 mistakes calm that is my free cyber coaching website tons of great information on there tons of awesome videos all on this kind of stuff all on business operations restaurant operations restaurant coaching tons and tons of different topics so if there's not a topic that you're interested in ask and I shall make a video so I've been asked several times about business partnerships in restaurants and this is a tricky subject okay because a lot of people don't go in with a proper business agreement one person has money one person doesn't have money I've been part of two restaurants that I've been a partner in I've been a business partner in both of those restaurants I did not put any money into my current restaurant aroma time I am the only investor slash partner in this restaurant nobody else is involved it's just myself and my wife we are the ones who funded a hundred percent we are the ones who run it a hundred percent we do have management Safi of key personnel they take the load off of us and it makes us easier for us to be restaurant owners however with that being said what happens if your buddy says hey I want to invest in you I have 50,000 I have $100,000 let's open up a place we'll go 5050 and I'll put up all the money so here are the basic guidelines here are some basic premises have been proven to be effective over and over and I have several friends that are doing this now of course there's you can be very creative with the way you open a restaurant the way you fund a restaurant the way you set up your partnerships extremely creative but this formula I'm gonna tell you is one of the more popular ones okay the one thing I want to make about this point is the person putting up the money needs to understand are you a working investor or are you just an investor because for me if I'm gonna open a restaurant somebody comes to me and says Marcus I have a quarter of a million dollars for you to open a restaurant a half a mil we open a restaurant I want to run that restaurant by myself okay I don't want a partner when you have a partner an operating partner that's when things go haywire when you have an investor that's different than a partner those two two differents the point I want to make in this video for the average person they're just taking 50 grand or 150 grand from a family member or or somebody else a friend who's loaning them or somebody who just met them and say hey you're the chef of this restaurant I really like what you're doing I got some money which basically happened to me in Colorado I thought I was going for an interview at a fancy Country Club and F&B director was like no no after the interviews like now I'm opening my own place and I want you I like your food I've seen what you've done in other places and you're my guy I'm bringing you in as a partner so with this being said partner versus investor so let's start on a small scale let's say two guys get together and they say hey Joe I have 50 grand let's go up in a place down the street and Joe goes hey Tom that's a great idea and Joe goes yeah let's go 5050 I'll put up the money and you do it big mistake it's never 5050 here's how this works if you're a guy that has 50 grand or 150 grand you're gonna fund something a hundred percent to a chef a known chef you pay them a salary they can get a bonus based upon the performance of the restaurant but they don't get equity until five years here's the crucial part five years is gonna take for them to get equity that means they have to bust their butt for you for five years and prove themselves and then you're gonna cut them 20% 30% 40% there's no reason to ever give anybody 50 50 or 59 5149 there's no if you're putting the money in it's your money okay as an if you're an investor in a restaurant there's no reason for you to work the restaurant you're the investor if you're gonna put in 50 grand or 150 grand into a restaurant and work every day you're buying yourself a job okay that's a buying a job you don't need to buy a job you go to work for somebody else and not have to buy a job huge difference between an investor and I'm sir who wants to be a managing partner that means you're buying yourself a job I can't stress that enough you're buying yourself a job don't buy yourself a job you put that money in the hands of somebody who you can trust you monitor the finances you have you have key points that you manage every week and every month there's numbers you have to manage food costs labor costs certain percentages how are sales going stick to a budget so you can lay all this out - you're managing chef you're managing partner who by the way put no money in by the way you can lay all these key points out every week you want to know the labor every week that person goes to you with a report and says hey Tom here's my report on our finances for the week or the month here's our here's our profit and loss statement I know so many businesses they have partnerships like this and they don't even look at a profit and loss statement and of them up they have no idea what they're making what they're doing wrong what they're doing right they don't know their food costs and that's because some guy gave another guy 50 grand to open up a place and there's nothing being measured and then all of a sudden they have problems and altercations with each other because nothing was ever defined clearly and all of a sudden now the guy who's busting his butt wonders why Tom the guy who put the money in isn't working his fair share see Tom never wanted a job Tom only wanted a restaurant he wanted a bar he never wanted to buy himself a job he just gave money because he had money and he because he believed in you so don't get upset that the Tom the guy with the money is not sitting there punching in and every day Tom's job is to come in and say hey I want to manage my investment but I want to manage it via the books I want to management via our online reputation I want to manage it in a managerial role not where I'm punching the clock every day not where I'm bartending not where I'm waiting tables that's not that's not the role of an investor that's the role of a partner when you go in to a business you're either going in if you're the money guy you're going in as a partner or you're going as investor okay now if you're going in as a partnering if you're gonna work day to day on the operations and then you're the guy you're funding is going to work there's no reason you should ever give anybody 50/50 on that 4951 there's no there's nothing like that doesn't that if you do that you're stupid you're downright stupid if you do that okay you invest money you're then I'm talking to the investor he remember who I'm really talking to you're the investor you put the money in the guy works for you he waits five years after five years you give him 20% you give him 30% there's no reason to go close to 50/50 up to those five years you give them bonuses based upon overall profit of the restaurant so the more he runs it like his own restaurant the more he gets compensated there's two different ways to look at his salary you can either pay him less of a salary for more equity after five years okay or you can pay more of a salary for less equity there's no reason to pay a guy 50 grand okay and give him 40 percent you might want to pay him 35 grand and give him the 40% see there's all different ways to maneuver and work this around and I know most people's thoughts when they go into this to say hey I got 50 grand let's go 5050 wrong wrong wrong so that's a basic rundown of how to set up a business an investor a partnership or whatever you want to call it some kind of some kind of partnership that's the best way to set of course there's many other ways where you know basically you're investing in a person who you put your faith in and if you have not put your faith in that person you need to manage them every day you invested in the wrong person flat out flat out flat out go to an attorney get up get up get a flawless business agreement get exit clauses get all kinds of things that allow you the flexibility of buying somebody out not buying something out so for instance if these two partners the investor who gave all the money and then the guy who's just working there's a sweat equity wants to walk away after a year two years three years four years there's zero for him there is zero for that person a person needs to wait five years to get equity and prove himself for five years and proven himself to manage all these key points and to make that company money okay at that point if he's not the one doing that that's not the bets that there's an out right there that's not the person for that investor that's not the person for that business that's not the person for that corporation but to walk away after two three years and think you're gonna sell your share that doesn't exist in the real world okay does not exist with real investors it exists in a real business movement okay this is a hardcore business less than that I'm telling people here that I know most of them you're not gonna agree with me on cuz I've talked to a ton of people on this like no no no no trust me this is the way it needs to be done I'm chef Marcus Giuliano thanks for watching if you like my videos please hit like subscribe to my channel and definitely pass it on