Associate in a BB industry group here.
Over the last couple of months (partly fuelled by a bit of extra downtime due to WFH) I have been working on a side business with a friend. Business has taken off much faster than expected and is currently doing $100k+ revenues a month - albeit growth will be slower from here as we have reached a bottleneck with both of our time commitments, but we are trying to hire. We have set up a limited company, hired an accountant etc. and are trying to do everything by the book.
Right now I am a 19% shareholder (my friend is the sole company director and 81% shareholder). In an ideal world this would be 50 / 50 with both of us as directors, however when getting compliance approval from my bank for the 19% stake it seemed much more complicated if you go over 20% as then you are assumed to exert "significant influence" over the company. I trust my friend completely to have my stake reinstated to 50% once my current situation changes. The business is completely unrelated to the sector I cover at work so there is no conflict from that perspective.
I am not ready to quit my job and potentially derail my career for this business yet, so I would like to continue working and doing this on the side for as long as possible.
The kicker here is that my friend's visa status will be changing in the next few months to a type that will not allow him to be the director of a company. So I will need to become the director. Does anyone have any experience of getting a directorship / large shareholding in a private company through compliance at their bank? I imagine that if I send a request in for this to be approved there will be concerns around my commitment to the bank etc. Is this an unwise thing to do?
Any advice is appreciated.
Thanks
I'm curious as to what people say. All I can add is that one of the more senior guys on my floor echoed your concern that once the bank finds out you are involved in a business outside of work, the level of scrutiny is high. From what I could see, he avoided creating any sort of paper trail that could be used to demonstrate he wasn't committed to the bank. For instance, I saw him bring two laptops to the office a few times and he would leave the office with his PC on those days. Don't think he wanted to use a cellular network since the bank paid for his mobile (versus reimbursing people like most banks).
Thanks for the reply.
Yes I would never do anything related to my side business on the bank's IT network etc. WFH definitely helps to stay under the radar!
$100k / month with two people running it?
What type of business is this and is it sustainable?
No doubt you will be more scrutinized about your commitment to the bank.
How much time do you commit to this and could you do it "after hours?
Yes just the two of us running it - from 0 at the beginning of the pandemic to $100k a month right now. It's e-commerce - obviously highly competitive and the landscape is constantly changing but industry trends are highly favourable for our particular niche. My main fear is the long term sustainability - do not want to be in the position where I quit to do this full time then we wind down 2 years from now and I'm left unemployable in finance.
Currently doing maybe 1 hour a day during the week and 5-10 hours over the weekend on average.
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