what would scooby do

A hypothetical question, but say you had £16k and wanted to invest it directly into a business - what percentage would you be looking for back every year..? i.e. would you be happy getting 10% return (£1600) back every year as long as the business was successful ??

Aztec Performance Ltd

iTrader: (234)

10% doesn't sound great unless its a watertight, established business in a 'safe' market.

10% on a new business start-up or 'a friends business' is rather poor.

Think of it this way. Why risk £16k for the sake of £800 extra over a secure investment?

It has to be worth your while and worth the risk.

What type of business is it?

AndyC_772

iTrader: (2)

Correct me if I'm wrong, but that 10% would actually be 10% less tax - which is a major disincentive IMHO. At least if you buy shares in a company instead, you get your Capital Gains allowance (just over £7000/year). The stock market has to pick up eventually...

A.

Dunk

iTrader: (1)

The level of return should reflect the level of risk associated with your investment. Government securities will offer the lowest risk & therefore return small interest, but you have the security of knowing your investment is not at risk. Alternatively buying lottery tickets would have a low chance of success but the rewards are potentially vast.
You need to assess the risk before deciding on your required return.

D

south-star

Exactly.......and without knowing the details how can we advise you?

FERRARINUTTER

If you put it into a new company tax relief on this money would be circa 20%

If the company was c100,000 originally to set up,
y1 c 10,000 between investors and about the same to staff in bonuses
y2 c 20,000 dito staff
y3 c 35,000 and 20,000 to staff

Though this is dependant upon management startegy, reinvestment to grow the company, market influences

Whilst studying at Warwick university and looking at companies (small ones upto 15 staff). Those with entrepernurial skills saw around £550k to £1million turnover in year 3.

Typically profits would be £275 to 500k.

Though some companies then managed to float on AIM (alternative investment market) and made fortunes such as the dot.com companies. OK it didn't last but the people had made their money and buggered off

ProperCharlie

although it's worth remembering that for every venture that ended up making a profit, another four or five start-ups failed.

what would scooby do

We want to offer some preferrential shares to somebody who wants to invest £16k, we don't want this person to have any say in the running of the business or be able to sell off his shares to somebody we don't like. The contract we have says that he must offer the shares to the remaining board members first, before seling to a 3rd party.

Now if the shares go up in value too much, we won't be able to raise cashe to buy him out..

But in saying all that, we want to give him a fair return on the 16k he invested.

Makalu

In current climate I would invest it in a managed property related investment vehicle rather than company stocks...

Some could argue now is a good time to buy company shares but you said you wanted a fast return ....

Property is your best chance!!!!


Mak.