How Are Ownership and Profit Shares Determined? let me answer this two questions. how Ownership and profit shares are determined. am also learning cause am a young CEO. firstly you must understand that, ownership and profit sharing are not fixed by the market, they are internally agreed and sRead more
How Are Ownership and Profit Shares Determined?
let me answer this two questions.
how Ownership and profit shares are determined. am also learning cause am a young CEO.
firstly you must understand that, ownership and profit sharing are not fixed by the market, they are internally agreed and structured by the founders or stakeholders.
How Ownership is Determined.
when, I learn that at the early stages of business, ownership shares is not advisable. Ownership is based on equity (shares or percentage stake).
let me share two our ownership is determined.
1) Initial Contributions
Capital (money invested)
Assets (equipment, tools, land)
Ideas or intellectual property
Time and effort (sweat equity)
Example:
Person A invests ₦5M
Person B invests ₦5M
→ Ownership = 50% / 50%
it can also be
Person A invests ₦7M
person B Invest 3M
–> Ownership= 70% / 30%
2) Founder Agreement
Before starting, partners agree on:
Who owns what %
Roles and responsibilities
Decision-making power
This is written in:
Shareholders Agreement
Partnership Agreement
With is two you can be able to determine ownership.
2. How Profit Sharing is Determined
Profit sharing depends on agreements, not necessarily ownership alone.
let me also share with you how to determine profit sharing of unlisted business.
1) Based on Ownership (Most Common)
Profits are shared according to equity %
Example:
You own 60%, partner owns 40%
→ Profit is shared 60/40
2) Salary + Profit Model
Very common in real businesses:
Owners working in the business earn salary
Remaining profit is shared as dividends
Example:
You (CEO) earn monthly salary
Profit at year end is shared based on shares
lastly, Ownership is about who owns the business. Profit sharing is about how the rewards are distributed. They are related, but not always the same.
ability to manage, comes first your ability to able to manage your income and Expenses. If you can control where your money goes, you're good at managing your money. Where is your money going?
ability to manage, comes first your ability to able to manage your income and Expenses.
If you can control where your money goes, you’re good at managing your money.
If you had money to invest today, where would you put it?
I will invest it in my business.
I will invest it in my business.
See lessHow Is Investment Value Calculated in an Unlisted Business, and How Are Ownership and Profit Shares Determined?
How Are Ownership and Profit Shares Determined? let me answer this two questions. how Ownership and profit shares are determined. am also learning cause am a young CEO. firstly you must understand that, ownership and profit sharing are not fixed by the market, they are internally agreed and sRead more
How Are Ownership and Profit Shares Determined?
let me answer this two questions.
how Ownership and profit shares are determined. am also learning cause am a young CEO.
firstly you must understand that, ownership and profit sharing are not fixed by the market, they are internally agreed and structured by the founders or stakeholders.
How Ownership is Determined.
when, I learn that at the early stages of business, ownership shares is not advisable. Ownership is based on equity (shares or percentage stake).
let me share two our ownership is determined.
1) Initial Contributions
Capital (money invested)
Assets (equipment, tools, land)
Ideas or intellectual property
Time and effort (sweat equity)
Example:
Person A invests ₦5M
Person B invests ₦5M
→ Ownership = 50% / 50%
it can also be
Person A invests ₦7M
person B Invest 3M
–> Ownership= 70% / 30%
2) Founder Agreement
Before starting, partners agree on:
Who owns what %
Roles and responsibilities
Decision-making power
This is written in:
Shareholders Agreement
Partnership Agreement
With is two you can be able to determine ownership.
2. How Profit Sharing is Determined
Profit sharing depends on agreements, not necessarily ownership alone.
let me also share with you how to determine profit sharing of unlisted business.
1) Based on Ownership (Most Common)
Profits are shared according to equity %
Example:
You own 60%, partner owns 40%
→ Profit is shared 60/40
2) Salary + Profit Model
Very common in real businesses:
Owners working in the business earn salary
Remaining profit is shared as dividends
Example:
You (CEO) earn monthly salary
Profit at year end is shared based on shares
lastly, Ownership is about who owns the business. Profit sharing is about how the rewards are distributed. They are related, but not always the same.
Thank you.
Henry Paul Akinmade.
See lessWhat are the step by step measures to manage money?
ability to manage, comes first your ability to able to manage your income and Expenses. If you can control where your money goes, you're good at managing your money. Where is your money going?
ability to manage, comes first your ability to able to manage your income and Expenses.
If you can control where your money goes, you’re good at managing your money.
Where is your money going?
See less