What Is Revenue Sharing?
Revenue sharing agreements allow investors to receive a predetermined percentage of a company's total revenue for a specified period. Unlike equity investments, you don't own part of the company, but you benefit directly from its sales performance.
This investment structure is particularly popular in Ghana for supporting local businesses, especially in sectors like agriculture, manufacturing, and services where revenue streams are predictable.
Key Advantage
Returns are tied directly to business performance without the complexity of profit calculations. As sales grow, your returns grow proportionally.
How You Earn Returns
Revenue Percentage
Receive a fixed percentage of gross revenue, typically ranging from 1-10% depending on investment size and company sector.
Payment Schedule
Payments are usually made monthly or quarterly, providing regular income that fluctuates with business performance.
Example Calculation
You invest GHS 10,000 for 3% revenue share in a retail business for 5 years:
- • If monthly revenue is GHS 50,000: You receive GHS 1,500/month
- • If revenue grows to GHS 75,000: You receive GHS 2,250/month
- • Annual return depends on business growth and seasonal patterns
Contract Structure
Revenue Definition
Clearly defines what constitutes "revenue" - gross sales, net sales, or specific revenue streams.
Payment Terms
Specifies payment frequency, reporting requirements, and audit rights for revenue verification.
Term Period
Fixed duration (typically 3-7 years) or until a multiple of initial investment is returned.
Minimum Guarantees
Some agreements include minimum payment thresholds or floors to protect investors.
Your Rights and Benefits
Revenue Transparency
Right to verify revenue figures through regular financial reports
Regular Payments
Consistent income stream tied to business performance
No Dilution Risk
Revenue percentage stays fixed regardless of new investments
Growth Participation
Benefit directly from business growth and expansion
Suitable Business Sectors
Retail & E-commerce
Predictable sales patterns and easy revenue tracking
Agriculture
Seasonal revenue cycles with growth potential
Manufacturing
Steady production and sales volumes
Services
Recurring revenue models and client relationships
Risks to Consider
Revenue Volatility
Your returns fluctuate with business revenue - low sales periods mean lower payments.
No Ownership Rights
You don't own equity or have voting rights in business decisions that could affect revenue.
Revenue Manipulation
Companies might structure transactions to minimize reported revenue, affecting your returns.
Economic Sensitivity
Revenue sharing is highly sensitive to economic downturns and market conditions.
Quick Facts
Legal Framework
Revenue sharing in Ghana is governed by:
- • Contracts Act, 1960 (Act 25)
- • Companies Act, 2019 (Act 992)
- • Securities Industry Act, 2016
- • Individual Contract Terms