In managing a business, KH friends must be familiar with the cooperation between investors and managers? Usually, such cooperation can occur due to limited capital when starting a business, thus making some business people decide to cooperate with parties with large capital. Vice versa, the investors also need business partners, especially those who want to work together seriously to develop their business. Well, if you are a financier or business manager who collaborates, of course you need to understand how the profit sharing system can be done for profit sharing. This is because the value of profit sharing will be influenced by the amount of funds spent by the investor. The more business funds spent by the investor, then of course he will get a larger percentage of profit sharing. However, everything still goes back to the model of the cooperative relationship established between the investor and the business manager. It could be that both have equal positions in a business or venture. Or it could be that the investor only invests shares, while the other party becomes the manager. There are also investors who provide funds to business managers in the form of debt. All of these different conditions will affect the way business profit sharing works. For more details, let’s look at each type or model of business profit sharing between investors and business managers!
Dividend Distribution as well as Salary
The first method of profit sharing is to give investment returns (dividends) as well as a monthly salary. This method can be chosen if you and your coworkers not only contribute capital in the form of money, but are also actively involved in managing the business. To make it easier to understand, see the example below! If A and B jointly set up a laundry business. When the laundry is established, A plays the role of washer and dryer, while B plays the role of sorter and valet service. The composition of capital and profit sharing is as follows: A’s initial capital of Rp80 million and B’s initial capital of Rp50 million. The calculation of the profit sharing portion of the business is A 70% and B 30%. As for salaries, it has been agreed that in a month employees will be given a salary of IDR 4 million. Over time, the laundry business posted a net profit of Rp50 million. Then A will get Rp35 million and B will get Rp15 million. Therefore, A and B are entitled to a monthly salary as well as investment profits because both are active employees. Conversely, if the laundry business suffers a loss, then A and B must also bear the loss together.
Dividend Distribution to Investors
In many cases, the business manager does not own the capital to operate the business at all. They only contribute their labor to manage the business from the capital provided by others. This is not only the case with foreign companies or investments, but also with small businesses. There are even P2P lending companies that target capital loans to farmers or cultivators. To make it easier to understand, see the example below! In rural areas, there are still many farmers and ranchers who work on other people’s land or livestock. If this is the case, then the owner of the land and livestock is only entitled to a monthly profit share and does not get a salary. Let’s say that in a month, the owner and the farm employee have agreed on a profit sharing of 80% and 20%, and the salary for the farm employee himself is IDR 2 million. Then in a month, the livestock business earns a gross profit of up to IDR 20 million. Then the gross profit will be reduced by operational costs and employee salaries, for example IDR 5 million, and the remaining IDR 15 million will be distributed to both parties, where the livestock owner will get IDR 12 million, and the employee breeder will get another dividend of IDR 3 million. The farmer is entitled to a salary as well as dividends. This is because the farmer and rancher are directly involved in the process of cultivating the business, while the landowner is not. However, if the business loses money, it is generally the investors or in this case, the landowners and livestock. The percentage of profit sharing depends on the agreement between the investor and the manager.
Dividend Distribution to Creditors
Limited capital in setting up a business means that managers often borrow capital from banks and People’s Business Credit (KUR). However, in relation to the dividends, the parties who lend the capital or creditors do not have a percentage share. This means that creditors do not have any rights to business profits. As a manager and borrower, you only need to pay the amount of money given and adjusted for other costs such as interest. To make it easier to understand, see the example below! For example, to set up a salon business, you must borrow capital from a bank of 100 million rupiah. The funds must be repaid within 5 years (60 months) and have a flat interest rate of 10% per year. So, you have to pay credit installments along with interest of 2.5 million per month, both when the salon business is experiencing profits, or losses. That’s the explanation of the profit-sharing system between investors and business managers. Given the importance of profit sharing in the sustainability of the business, investors and business managers need to clearly determine the type of relationship between the two parties, whether they are investors only, investors as well as partners, or only as creditors. In addition, you also need to ensure the legality between the parties involved in business development by making an agreement at the beginning. This agreement is very important to make, because it will be important evidence in the distribution of business results. The document will also serve as a guideline so that no party feels disadvantaged. An agreed profit-sharing system agreement will also reduce the risk of fraud, both from investors and business managers. So that both parties will be more equally aware of their respective functions and positions. Therefore, the cooperation relationship between investors and business managers must always be outlined in a written agreement so that the legal relationship and rights and obligations are clear.
KH Contact
Well, for KH friends who currently want or are undergoing a cooperative relationship either as a financier or business manager, immediately take care of your business profit sharing system agreement with Kontrak Hukum! Kontrak Hukum can assist you in making and reviewing a business profit-sharing agreement contract that suits your business cooperation needs. KH friends can visit the page https://kontrakhukum.com/kontrak/ or contact the Kontrak Hukum team through the following link Ask KH and Direct Message (DM) to our Instagram social media @kontrakhukum.
