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HOT! Would you do this deal? Need the opinion of fellow entrepreneurs

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UncleIroh

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Hello guys. How are you? Would like your opinion on this deal I have been considering.

My family and I own a pretty succesful business in Europe. They have been doing this for over 20 years so they know the business.

Lately, we have been considering expanding. At first, we wanted to set up more brick and mortar stores. But, I met an investor and told him what he thought about the business and he loved it. He suggested that we start to sell our products through an ecommerce website in the US. Much bigger market and opportunity. He built us a custom ecommerce website which still isnt live. It is almost finished just need to buy new products for it (the ones there are ours from the store) and finish the deal with him. If we were to do it, we would be 50/50 partners. We would sign an agreement, instead of filing a new business entity in which his parent company would pay taxes, etc and they would pay us 50% royalties so that we can save taxes from that 50%. He would do all the administration and accounting plus managing the website. And we would provide business expertise, product knowledge and suppliers.

Would you take this deal and give up 50% of the profits? Also, he said that he wont put any money for inventory at first as he already invested 20000 for the website. Ultimately, without him I dont know if we would be able to do it.
 
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AllenCrawley

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Would you take this deal and give up 50% of the profits?
No, I wouldn't.
he already invested 20000 for the website.
He already invested $20,000 in the website? Ummm.... I don't think so. It's just a Wordpress website with woocommerce. Nothing about it looks custom in any way.

You could do this yourself with Wordpress and a nice, inexpensive theme from themeforest.net. Or hire someone from this forum that would do it for you relatively inexpensively. No need to go 50/50 with someone in this situation.
 

UncleIroh

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No, I wouldn't.

He already invested $20,000 in the website? Ummm.... I don't think so. It's just a Wordpress website with woocommerce. Nothing about it looks custom in any way.

I thought the same. But asked some external developers and told me that the paid theme is just the looks. But everything else that takes developments like "You need to create a seamless checkout process, handle returns, discounts, promotions, special pages, fraud, customer support, design, maintenance, SEO, site speed." That are nothing compared to just the theme. And others told me that a bid for a website like this coded in the US goes from 10k to 40k
 

AllenCrawley

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I thought the same. But asked some external developers and told me that the paid theme is just the looks. But everything else that takes developments like "You need to create a seamless checkout process, handle returns, discounts, promotions, special pages, fraud, customer support, design, maintenance, SEO, site speed." That are nothing compared to just the theme. And others told me that a bid for a website like this coded in the US goes from 10k to 40k
The woocommerce plugin and extensions would take care of most of that.

A Shopify site is also a good alternative. Even with a lot of paid add-on apps you'd be less than $100 a month.
 

UncleIroh

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The woocommerce plugin and extensions would take care of most of that.

A Shopify site is also a good alternative. Even with a lot of paid add-on apps you'd be less than $100 a month.
Yes. I agree. I think we could do it on our own using a good shopify store with a paid theme and a fulfillment house. How difficult would it be to be legal and handle everything from outside the US. Thats why I need them and dont have leverage. I dont understand many of the accounting and legal part of business in USA.
 
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AllenCrawley

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Yes. I agree. I think we could do it on our own using a good shopify store with a paid theme and a fulfillment house. How difficult would it be to be legal and handle everything from Argentina. Thats why I need them and dont have leverage. I dont understand many of the accounting and legal part of business in USA.
I have no experience with this but my initial thought is that it wouldn't be too difficult. A good CPA and attorney would be worth their weight in gold.

Even if it was difficult, you'd have to ask yourself if giving up 50% is worth the "ease" they're offering.

Here's a recent marketplace ad offering websites:
Marketplace - Jpanarra's: Need a Website? I’ll Make it for You.
 

UncleIroh

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I have no experience with this but my initial thought is that it wouldn't be too difficult. A good CPA and attorney would be worth their weight in gold.

Even if it was difficult, you'd have to ask yourself if giving up 50% is worth the "ease" they're offering.

Here's a recent marketplace ad offering websites:
Marketplace - Jpanarra's: Need a Website? I’ll Make it for You.
Also its worth mentioning that this person is a very succesful entrepreneur and has a lot of experience. That alone and his advice might make it worth it.
 

Contrarian

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Why would he invest $20,000 of his own money building a website for you if you haven't signed an agreement already?

There's only three possible answers that I can see. Most likely, he's bullshitting you and therefore not to be trusted.

Or

He's reckless and lacks judgement, in which case you don't want him as a partner.

Or

He can make so much money out of your products that he's willing to risk blowing $20k just for a chance at getting in on the deal. In which case, you don't need him.

And...

What are you really asking for - advice, or approval?
 

SquatchMan

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I met an investor on quora

Ok...

this person is a very succesful entrepreneur and has a lot of experience. That alone and his advice might make it worth it.

Sorry OP, from what you've told me this sounds like a scam. Successful entrepreneurs don't usually seek out investment opportunities on the internet. And if he is legit, it still sounds like a bad deal and I wouldn't do it. This sounds like a fulfillment agreement with you paying 50% of sales. I'm sure you can do better than that with a little bit of upfront work.

I think you've already made your mind up though.

That's not a custom site. No way it's worth $20,000 USD.
 

UncleIroh

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Ok...



Sorry OP, from what you've told me this sounds like a scam. Successful entrepreneurs don't usually seek out investment opportunities on the internet. And if he is legit, it still sounds like a bad deal and I wouldn't do it. This sounds like a fulfillment agreement with you paying 50% of sales. I'm sure you can do better than that with a little bit of upfront work.

I think you've already made your mind up though.

That's not a custom site. No way it's worth $20,000 USD.
I have not made up my mind. I am asking for your opinion.
 

jon.a

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Also its worth mentioning that this person is a very succesful entrepreneur and has a lot of experience. That alone and his advice might make it worth it.
We used to have a very successful entrepreneur with lot of experience here. He was invited to leave.
 
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AllenCrawley

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Sully1994

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Really dying to know what was said now^

Sucessful entrepreneur eh.... According to who, him? You know you can lie on the internet right ? At least look for social proof to confirm this.

As was mentioned before, this deal smells bad literally every way you slice it. I'd back out.
 

MJ DeMarco

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Sorry, you don't get to toss out a query asking for advice and then once you receive it, delete it. We aren't your servants and the time people took to answer your question is payment of the thread's existence.

Your deletions have been restored, less any identifying information.

PS: The website you provided (which is now no longer linked) doesn't look like it cost $20K to make.
 

UncleIroh

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Sorry, you don't get to toss out a query asking for advice and then once you receive it, delete it. We aren't your servants and the time people took to answer your question is payment of the thread's existence.

Your deletions have been restored, less any identifying information.

PS: The website you provided (which is now no longer linked) doesn't look like it cost $20K to make.
Thanks MJ. Google endorsed it and I didnt want it to. I think you all might think differently if I tell you who this person is. Unfortunately, he is too much of a public personality and people google him and dont want this to be linked to his name. He is not a scammer. Have done all the research I could. He has partnerships with microsoft, lockheed martin, us army as well as registered patents under his name. Anyways thanks a lot for the advice, but being someone with 0 connections in the US and him having tons, I think I will take the deal.
 

MJ DeMarco

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jon.a

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Sorry, you don't get to toss out a query asking for advice and then once you receive it, delete it. We aren't your servants and the time people took to answer your question is payment of the thread's existence.

Your deletions have been restored, less any identifying information.

PS: The website you provided (which is now no longer linked) doesn't look like it cost $20K to make.
I think that you could have kept the url for folks to look at but broken the link.
 

AgainstAllOdds

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He built us a custom ecommerce website which still isnt live. It is almost finished just need to buy new products for it (the ones there are ours from the store) and finish the deal with him.

lso, he said that he wont put any money for inventory at first as he already invested 20000 for the website.

The biggest thing you're missing is trust. How can you trust this guy if he lied to you about the cost of building the website?

I can give you a badass wordpress site in literally 5 minutes by migrating an existing site to a new domain. Then it takes maybe a couple hours to upload all the new products, change logos, etc.

If he lied to you about the website, then what else is he lying about?

Does he actually have the deals he says he has in place with Lockheed Martin, etc?

Will he respect your "agreement" when the business takes off? Or will he just steal all your suppliers and incorporate another company that you can't sue?

There are some deals that you walk away from. This is one of those deals.

Then after you walk away, start looking into fulfillment centers in America, internet marketing, and maybe, maybe giving a 50% profit commission to an affiliate willing to market the product.

The likeliness of you getting screwed is a lot higher than the likeliness of this working out.
 

G-Man

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But, I met an investor on quora
He suggested that we start to sell our products through an ecommerce website in the US. Much bigger market and opportunity.
It is almost finished just need to buy new products for it (the ones there are ours from the store) and finish the deal with him.
without him I dont know if we would be able to do it
He would do all the administration and accounting
Would you take this deal and give up 50% of the profits? Also, he said that he wont put any money for inventory at first as he already invested 20000 for the website.

@UncleIroh read that in the order I clipped out for you, and then try to convince yourself it isn't a confidence scheme.

EDIT: You wouldn't be the first guy to lose money on sheer stupidity because he got greedy for easy money and willfully ignored all the red flags. It's no reason to be ashamed. If, however, you have a dozen people lay out all the reasons its a bad idea and you still go through with it,... well, that thing about no reason to be ashamed... yeah, scratch that.
 

AllenCrawley

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Anyways thanks a lot for the advice, but being someone with 0 connections in the US and him having tons, I think I will take the deal.
Why did you ask for advice? It's clear you already made up your mind. I think you were looking for validation rather than advice.
 

jpanarra

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I bulid websites using HTML/CSS and I’ve done Wordpress several times. Also, Woo commerce might be ideal for what you’re doing. I’m going to break this part down.

I thought the same. But asked some external developers and told me that the paid theme is just the looks. But everything else that takes developments like "You need to create a seamless checkout process, handle returns, discounts, promotions, special pages, fraud, customer support, design, maintenance, SEO, site speed." That are nothing compared to just the theme. And others told me that a bid for a website like this coded in the US goes from 10k to 40k



Seamless Check out Process/ Discounts - Already built in woo commerce and they offer a number of extensions that make the process even easier (not really necessary). Woo Commerce has plugins that can help you manage sales for products and product groups.

Handle Returns/Consumer Service/Fraud - You can find a really good Virtual Assistant to organize and handle this for a much smaller portion of the 20k. There’s also consumer service firms all over the internet and will handle that for you for a monthly fee and the price varies depending on the service you want.

Design/Maintainence/Site Speed - As @AllenCrawley mentioned I’m offering a crazy deal on a website.(thanks for the mention) Depending on the number of products but it’s starting at 350$ for the theme and build. Speed can be turned up by the hosting provider and proper web caching.

promotions/SEO – This stuff can be outsourced for far less and you’ll be able to set up an amazing campaign for around 400 per month should be way cheaper than 20k. And you'll be able to find tons of good marketing stuff in @Andy Black 's approach to google adwords. (which is the first place you should start marketing your stuff online)


I understand your concern for the distance and $$ that’s where you should consider an accountant and CPA stateside if you plan on selling to the states.


50% is WAY too much to lose and you have to dish forward 20k to give that much of your business away. I hate to see someone give away so much for so little.
 

Roli

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Hello guys. How are you? Would like your opinion on this deal I have been considering.

My family and I own a pretty succesful business in Argentina. It is a fashion jewelry business. They have been doing this for over 20 years so they know the business.

Lately, we have been considering expanding. At first, we wanted to set up more brick and mortar stores in latin america. But, I met an investor on quora and told him what he thought about the business and he loved it. He suggested that we start to sell our products through an ecommerce website in the US. Much bigger market and opportunity. He built us a custom ecommerce website which still isnt live. It is almost finished just need to buy new products for it (the ones there are ours from the store) and finish the deal with him. If we were to do it, we would be 50/50 partners. We would sign a joint venture agreement, instead of filing a new business entity in which his parent company would pay taxes, etc and they would pay us 50% royalties so that we can save taxes from that 50%. He would do all the administration and accounting plus managing the website. And we would provide business expertise, product knowledge and suppliers.

Would you take this deal and give up 50% of the profits? Also, he said that he wont put any money for inventory at first as he already invested 20000 for the website. Ultimately, without him I dont know if we would be able to do it because we are from argentina.

Many people offer this on Amazon, however they tend to be expert at optimisation. The contract should have lots of stipulations on his side. As in he promises to get to a certain amount of traffic, page rank, sales etc. in a set amount of time. Say 3 months; in return you supply inventory, and promises to give away product at discounted rates and perhaps some other stuff.

If he can show you undeniable proof that he can achieve a certain amount of sales; however you will need to advertise, who is going to pay for that? Has he offered you any guarantees? How complex is the contract or precontract agreement?

If this was Amazon, I would say; go for it, if the contract was right, in this instance it's hard to say, because you offer very little details as to the ins and outs. If there is more to it, it may still be a maybe. However if you have described all there is to know, then I would say no.

$20k for a site sounds way over the top, you can get a top developer to sort out a high level site for between $1200 and $5000, so to start a business relationship on such a blatant lie is not a good idea in my opinion.
 

Longinus

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Take the deal man. I'd do it.

WigglyIllfatedJunco.gif
 

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