About to sign a deal for 8 years. Should I wait or just go for it?

by Halustra. Posted on Sep 17, 2020    5    32


Hi, I'm a 20 year old business student in turkey studying in istanbul. i contacted with a friend to a major clothes manufacturer that wants to integrate everything ( 900 products ) to amazon / files pictures etc are ready / but in the past he tried this a couple of times and the people he worked with quit after a few months moving to another business so he doesn't trust by handshake. He wants to sign an 8 year contract with me if I don't do any other business and only this, offering %50 of the profit. Not revenue, direct profit.

I'm comparing this to a marriage - like I'm marrying a high status women. It does have perks and in 4-5 years I'll probably be making at least 10-20k euros a month by the size of his production facilities and moving them online. But idk if I should try one night stands first before.

If I work hard on this, I will definitely get rich with time beyond anyone in my family, people I have met, top CEO's in the country, and everyone I know.

But in Personal MBA - Josh Kaufmann has a specific chapter for this > There are 3 universal currencies: time, resources, and flexibility. In this case will trade my time and flexibility for resources.

Idk if I'm being an entitled kid by not taking this huge once in a lifetime deal ( okey maybe objectively there can be other oppurtunities in the future ), or am I being smart before signing into something that'll take up my whole 20's.

All advice much appreciated, I really really can't decide objectively.

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TLDR: I'm 20 yo biz student should I sign an 8 year deal with a company that'll give me %50 of profit.


Comments

TwentyTwoBananas 1

Counter him with the same exact offer except you get to do whatever the hell you want (business-wise) on the side.

Your deal with him is to perform a service effectively. If you can do that, it’s no business of his what else you do with your time.

  Halustra 1

yea we separated ways but maybe later if I want to get into the clothing business I'll use his network. we got off on a good note

papiwablo 1

When you talk about the trinity and one being time — you’re about to waste a shitload.

notfromvenus42 1

Is he giving you joint ownership of the business? Or just some promise to give you half of the profit at the end of the year? (Note: many businesses make little/no profit. Half of the annual profit might be €1000.)

  Halustra 1

it's the company evaluation and profits both %50. but I've already decided after reading 20 comments on not to do it. thanks tho

HayesDNConfused 1

What are the laws of breaking contracts in your country?

  Halustra 1

jail and paying money

HayesDNConfused 1

Then 8 years is too long of a contract for both of you. Should be 1 year plus extensions.

  Halustra 1

yea i cancelled the offer just now after asking on reddit and getting feedback. thank you tho

ggn0r3 2

Don't accept.

Experience matters. You have no experience. If someone wants to sign on a 20 year old business student with no experience for 8 years, something is fishy.

Statistically, this venture will fail. You will sign up to fail for 8 years. In that time, you will make no money and improve on 0 skills.

If you haven't talked about the budget required for this to work, you're probably gonna pay out of pocket. You're now a business partner. He handles the inventory and you handle the marketing. That includes the marketing budget.

  Halustra 2

thank you for your take. I realize how weird the situation is after seeing it from an outside perspective of a handful of people. It's weird how I naive I was like 10 minutes ago and now I can see all the red flags that previously wasn't there because I was solely focused on the money. I can always find different oppurtunities and the fact that my university is the 1. in turkey helps.

thanks again. cheers.

chickenroads 2

Yes be wary & 8 years is a long time. If it is that lucrative maybe a 2 year deal.. if you aren't making enough money by then its be much better to be able to get out free & clear

tobefreeisprayer 4

An 8 year contract is a very long time in business to start out, and a very short time once you know what you’re doing. Nobody knows what the world will be 8 years from now, and people who enter into such long partnerships in my country (8 years from now), end up making a lot of money, and killing each other over it. Their kids become reality stars.

Anyway, you’re absolutely right. Flexibility and liquidity are highly valuable assets, especially when you’re young. There are so many things that can happen in your life now, ups and downs, things I never wish upon you but may happen.

Tell your friend, you understand where he’s coming from. He should also trust the person he’s handing over his business to to keep performing, and an 8 year contract gives you too much power and comfort. He wouldn’t hire an employee for 8 years. So tell him you’ll sign either a 1 year contract, and see how it goes. If it works out, you’ll sign another 2 years, and then see how it goes. Now it’s 3 years and you know everything about the EU garment business online, have money, and are 23. You’re in a better position to take a call in your life.

An alternate structure is to sign an 8 year contract with specific drop out points. 1 year in, 3 years in, 5 years in etc with agreed upon settlements at each stage. Tell him you have complete confidence in him, it’s just you are 20 years old, and there’s a lot of life. Tell him he wouldn’t trust a 20 year old for 8 years with a business.

From both my legal and business experience, it’s not bad to have an 8 year contract, but a contract which starts out with a long-term commitment like a decade without the option of review, renegotiation and termination is a contract that ends up in court. Even power companies who makes 15 year electricity supply contracts and invest billions into plant production have an annual review clause.

  Halustra 1

I understand and thank you for your detailed explanation. Now I have logical reasons not to do the deal. It's just that with the potential of large sums of money messes up with the mind since I'm not used to it while minimizing the downsides and risks with it. I think I will stick to other projects. Thank you mr. tobe i sincerely and dearly appreciate your advice.

mauro_oruam 5

I would not do it. unless I have a set salary. a very comfortable one.

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you are an employee not a business partner.

You are very optimistic, but you should also be looking at the down side.

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what if the business is not as successful as you think it will be?

You will be stuck with a low paying job for the next 8 years.

  Halustra 1

Can't I try again if it isn't succesful? Or at least I'll gain experience. maybe for a few years ı won't make much money but once I get the gist of it, it can be valuable.

but I do see your point, it might not too - which might force me to try again

but still, idk man i'm like %50 this side %50 optimistic side

Dreamiekid 3

Nothing is valuable about getting scammed.

  Halustra 2

i understand, I also asked another sub and they gave me the same advice. thanks for your input I'm %95 more clear on my desicion to not do it

JeF4y 6

You are holding 100% of the risk in this scenario. Your partner is has zero risk. It costs him nothing (on your end) if the business fails. Yet it will cost you DEARLY if this fails.

I would at a very minimum set up some metrics to allow you to break from the business or force him to pay you a salary if sales volume metrics aren't achieved.

jubun 2

Exactly what I feel. Usually such long term contracts, or bonds, are like when they paid for your education or training. Like pilots. But in those cases, they have made the investment and taken up risks and paid for you first. This is like a 0 upfront no risk thing for the other party.

  Halustra 6

i have evaluated everything and decided not to do it and thinking in the way you proposed strengthens on not taking it. thanks.

Lloydwrites 13

Talk to some of the people he's no longer doing business with. They might be able to explain why nobody wants to work with him for a long period of time.

Dreamiekid 14

No salary or hourly pay? I don’t think someone are going to give you 50% profit. Imo they just want you to do all the work for basically free and just baiting with that.

  Halustra

Here's the thing, we will sign a deal with signatures that will guarantee it. ofc I won't get into it unless it's legally applied. If I sell 50 tshirts - 300 euro profit > I get 150 euros.

If I sell 5000 tshirts > 30,000 euros / 2 = I get 15,000 euros.

Dreamiekid 1

Are you getting paid a salary or hourly?

  Halustra 1

I'm getting paid per unit I sell

Dreamiekid 3

Don’t do it. Waste of time.

papiwablo 4

This

qla_all_bay 13

What happens if you only sell 1 shirt per month? And now you're stuck not making any money for 8 years?

Or what happens if the owner decides to take all the "profit" and reinvest it into new merchandise, so now there is no profit, and you make no money.

You're not covering your downside risk.

And if deal is so good, why did all the other employees he's hired quit and move to other businesses?

  Halustra 1

He can't take all the profit as I will controll the income from amazon. he is only in the production side. I will controll the whole e-commerce and financial side. Even if he does I can sue him and get all my money back

qla_all_bay 1

Yea I mean give it a shot, but don't agree to be locked in for 8 years that's just foolish.

  Halustra 2

yea i declined him yesterday. i now feel free lol