Structuring partnership in a Business entrepreneur how earn by blogging blog

Hey Guys! Love this sub and been a lurker mostly but have something on my mind that I could get some input on.

Ok so my friends and I started a venture start of the year and its been 5 months we've been going at it. Currently, on paper, its a partnership of 2 guys - the two of us were the ones that started it. We got more friends involved and we have a small team now of 7 - its a food business that requires alot of hands.

The idea was to bring more people into the partnership if they committed 6 months or more so we know they are as passionate about the business as the two of us are.

So now we're nearing the 6 months mark so its time to get the paper work done and a few things have transpired.

Background: - Everyone was required to contribute X dollars to be part of the operation, mostly to make sure we had seed money - So far, the seed fund has been untouched and all the revenue has gotten back into the business and we've been using that for all necessary purchases - The x-money was to get some 'skin in the game' so that we could see who were serious mostly. It was never going to be invested or appreciate. - I have set expectations that after 6 months, people can decide to be share holders OR be paid by the hour since by then, they'll have an idea of the level of commitment they'd like to offer

So one member decided to leave us after a few events because they weren't as interested anymore and they had other commitments. In my mind my initial thought is, they'll get the original $500 back. But they have an expectation to be paid for the time that they spent with us. So this is the first bit I need help with - I am not sure what is fair. We never said the seed was going to appreciate and we don't have 'profits' to speak of to share neither - all our time is currently 'donated'. However is it fair for them to just get the original seed amount after about 20 hrs of time.

The second issue I need help with is structuring the stakes for each member - the two of us are the primaries but we now need to see how much stake to provide to each of the subsequent members. What is a framework to determine how much to share with each member?

This is really my first Rodeo and I could have messed it up from the beginning because we just went with the flow but any thoughts or input would be appreciated. Its always hard to think of all the things that could be repercussions later and I don't know what I don't know. Thoughts? Thanks in advance :)

submitted by /u/daworldisblack
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