View Full Version : Loan/partnership?
01-29-2012, 12:01 PM
I ran into someone who asked me what I do for a living and I told him production (as I dont tell many people that I am opening a haunted house) (most people think im crazy) NOT in this case! He wanted to know more about what I wanted to in productions, I dont believe that it is okay to lie so I told him haunted houses. I talked with him for a little while about what I have done to start the haunt, his reply was a shock to me. He told me he wanted to invest in my business and wanted to partner with me.
I am not a fan of partnership, but a investment/ loan would be nice. Ive heard horror stories about parnership and I dont know that a non haunter would know whats best for the business. I dont want to lose control of my dream.
Id like to set it up as a investment and offer him a job as a manager.
How would you handel this?
Thank you all. you all have been awesome awnsering all my questions(:
01-29-2012, 01:14 PM
Depends on how much he's investing? if you can't get a haunt off the ground without some investors then you kinda have to.
01-29-2012, 02:12 PM
Most "investors" just want a return on their money. They don't really care anything about running the haunt. If so, that is good and bad. The good thing is that you wouldn't lose control of your haunt and dreams, the bad thing is that you may not be able to promise him any type of return. With the haunted house industry it is impossible to guarantee someone a 10% return on their money because weather, etc. can affect your business so much that you may not be able to pay the loan back. Partnerships are sometimes terrible but others are great. Just make sure that you set it up how you want it and dont ever give up more than 49% ownership of your company. A cost-share would probably work best.....if your overall cost is 100,000 and he invested 20,000 then he should get 20% of take-in or something to the sorts. That way it would even give him a little extra incentive to promote and get people there so that his investment is better.
01-29-2012, 03:49 PM
"I am not a fan of partnership, but a investment/ loan would be nice."
A good partner can really be nice. As SCfearfarm stated stay in full control. 51% or better. If he wanted to put up 60k on a 100k haunt he still only gets 49% of the return. A loan is paid back in full at a very low interest rate regardless of the outcome. An investment is a % return on the sales. No guarantees. If you have to guarantee so much money to be paid back then it looks more like a loan and his rate of return goes down. As you stated you have already started the haunt. Act like you don't need him to make it happen, but extra cash would help. Keep it on your terms. A dream for an investor is to see a person with a good idea, low on capital, and who also has a lot of get up and go. If you rent the location I would be more cautious. A crooked partner with money might see what you do and try to put you outta business next year.
01-29-2012, 05:27 PM
For instance, a local man bought a going business using money loaned to him by an elderly gentleman. Everything was going great til the old man died. Then his "Estate" demanded full repayment, NOW, which was several years early which could not happen without selling the business.
When it comes to legal contracts they are only as "Good" as the two people signing them, a lesson not to be discovered after years of hassles and legal fees.
Check out your potential benefactor in as many ways as possible before anything happens.
01-29-2012, 07:34 PM
No way. 99% of all haunts lose money the first several years. As a business man he will be looking to get a return quicker than that. I'd say try to avoid a partnership money usually has a way of destroying things.
As for investors will he be willing to invest a few hundred grand in a risky business? People go to a haunt in the last Saturday before Halloween where they should be going to the last Saturday in September when it's slow to really get a true sense of the business.
01-29-2012, 07:40 PM
I'm scared to death of involving other folks, especially strangers or people I don't truly know. My investor is a friend of mine. We've never hunted together, but we're about to. And I don't go ANYWHERE with a person I don't trust, knowing they are armed. With that said, I also have to mention that I'm building my first year with only $20,000. I've invested $5,000 so far and have more to go and I haven't built a single panel.
My friend / investor is investing already in my airbrush business. Which we started last year and he still won't let me pay him back with my "tater money" as he calls it. He said "Let's keep our money straight! If your airbrushing starts to make money, pay me back with that money, and if we do this with the Haunted House, we'll keep that seperate too"
He's a great guy and I know him, but I'm still scared to let him invest too much. I'm only into him for $3k so far, that's interest and everything. So our money is small. In my opinion, I'd say "if you know him well enough to not be nervous, as stated before, give him up to 49% on a no matter what basis" .. along with good luck of course.
Just think long and hard, that's the least I can say. And, good luck and hope you have a great year!
01-29-2012, 09:42 PM
Having a person put money not only in your 1st business, but now considering a 2nd business is not too far off from marriage.
"My friend / investor is investing already in my airbrush business. Which we started last year "
Is he strictly an investor or more of a partner who started the business with you?
"Id like to set it up as a investment and offer him a job as a manager."
Him having a job as manager is being a partner more than an investor.
Get all terms in writing BEFORE he is allowed to "invest" in anything. Once anything goes sour with one business it most likely will go sour with the 2nd.
Bradenton Haunted Trail
01-30-2012, 08:48 AM
Last year was our first year going pro and we actually did turn a small profit. And he invested a large sum of money lets just say we did not make 10% profit. But he and I where both very pleased with the first year attendance over 7,500 guest. I hade the idea and background he had the money legaly I own 51% of the company but we split it 50/50 I do almost all the construction and most of everything else he helps when he can. But he has been a friend for almost 8 years now. So if you do not know him that well get a lawyer to draw up partnership[ paper work with what his and you responcabilities are. Also you might want to concider a non compeat contract where he can not compeat with your business for a set time after your partnership disolves. I have done that with the land owner that I lease from. he can not have a haunted attraction at his place or be ilnolved in a attraction for 5 years after if and when we part ways.
02-01-2012, 01:35 PM
I had a friend several years ago who helped me when I was in manufacturing. He did all sales, website, and PR for 25% commission so I could concentrate on producing a product line. I knew this guy for a good 10-12 years and trusted him. Then he got a girl friend. Then it got to where he would consult his girlfriend on his end of the business deal. Then it got to where he couldn't fart in the wind without his girl friends permission. Had to tell him to hit the road. No matter how good you know someone at least draw up something simple so you both know where you stand. You can never foresee what may happen.
02-01-2012, 06:57 PM
Partnerships... All I can say is run, run away as fast as you can!
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