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business partnerships

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Be real careful is an understatement. Pro - someone else to take some of your load Con - what if they don't do it to your standards?

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  • Andy_22
    Andy_22 Member Posts: 2
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    Taking on a business partner

    I have the opportunity to take on a business partner. What are the pros and con's that you have run into with business partners?
  • David Sutton_6
    David Sutton_6 Member Posts: 1,079
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    Be real careful!!

    i had partners, and well lets just say ...you see the real colors when money is involved. Its more work than being married.Have a lawyer draw up a agreement and make sure that if you die for some reason your wifes not eaten cat food! Be up and Honest and expect the same.

    Good luck


    David
  • ScottMP
    ScottMP Member Posts: 5,884
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    hope this is'nt

    a friend, cause its a sure way to loose a friend.

    One Boss, One Leader, one set if rules.

    Some people can make it work, most can't. I hope you can just keep an open mind. Have a WELL defined scope of work and job description.

    Scott

    To Learn More About This Professional, Click Here to Visit Their Ad in "Find A Professional"
  • mikea23
    mikea23 Member Posts: 224
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    First ONLY do this if you need to for financial reasons.If you dont need the added investment why would you want a partner.

    If you do put it all on paper and determin everybodys roll in the company two people doing the same things is a disaster and asking for problems.

    MikeA
  • ALH_4
    ALH_4 Member Posts: 1,790
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    Business Plan

    I have not yet owned a business, but I have investigated it quite a bit. It seems to me that if your potential partner brings skills to the business that complement your own, it could be a very good match. Sometimes one person has a head for business and the other is strong technically. It would be a good idea to go through in detail, and make necessary changes to the business plan before agreeing to a partnership. If there hasn't been a clear written business plan in the past, now is the time to write one. Then at least you know you are both on the same page at this point.
  • Steve Ebels_3
    Steve Ebels_3 Member Posts: 1,291
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    Andy

    That's the way I started out. I was looking to get out of the hardware store biz for several reasons. The guy that did our commercial refrigeration asked me one day if I'd be willing to help him on a pretty substantial HVAC install in a restaurant after hours and I said yes. The job took several weeks and by the end of it he said, "you really know your way around this stuff and you do nice work. We should be in business together". Long story short, I had known the guy for several years and I liked him so we wound up in a 50/50 partnership. Went to a lawyer, thought we had everything hashed out, tied down and no lose ends hanging anywhere. It went good for about a year just doing installations and little service but it became apparent that I was landing about 90% of the jobs that we were doing. I was going to see people after spending all day on an install, doing the quotes, rounding up materials, etc etc. That was OK with me because I felt that I was the rookie and my partner was the one with the HVAC license.

    Word got out that I was doing HVAC work and folks started calling for service and maintenance type work. I talked it over with my partner and he basically said, "do it if you want, I've paid my dues there and don't like to do service anymore." I proceeded to do the service work that came in on my own time, with my own truck and tools and using parts that I bought with my own funds. (My partner ran the company checkbook and wasn't real forthcoming with sharing the information is contained)
    One day we were out on a job in my truck and he came across a stack of service invoices that I had in my bill box. He did a double take and said, "I want my half of all this"!! Needless to say, I brought to his attention that he had given me the green light to do the service on my own and leave the company out of it. I'll leave the rest of the conversation to your imagination.

    We went on for several months after that and the topic was never discussed again. The first clue I had that things weren't going to work was when I called a supplier to order a furnace and the counter guy said I needed to talk to the manager. He informed me that my partner had called and told him our business was being dissolved, he was closing the account and that I was a no good (**$)#@(#$(

    It was the best thing that ever happened to me business wise!! Last I heard of my ex partner was that he had left his wife and kids and shacked up with a psychology student at one of the universities here.

    Moral of the story, and I think that I've read this somewhere also, less than 5% of business partnerships last over 2 years. If you do it, make sure that both of you have a very clear understanding of who's going to do what. Spend a LOT of time defining your responsibilities to each other and the business. Talk about everything from time off to overtime, who handles the bookwork, how often you'll have a meeting to go over those books, company paid mileage, phone bills................you name it. Talk about it even if it seems to be the most trivial thing to both of you. A dozen trivial things can add up to an insurmountable problem in a hurry.

    If you're thinking of taking on a partner because he can bankroll something you want to do, think again. If he's (she's) supplying the cash, all he's doing is hiring an indentured servant. YOU!

    Can you tell I'm not real keen on partnerships?

    I like a good old fashioned dictatorship myself :)
  • jim lockard
    jim lockard Member Posts: 1,059
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    partnerships

    first to sail and first to sink. What has worked well for me over the years is joint ventures, I learned when I was installing medical equipment (X-ray and cat scan) that I stood a better chance of both getting the job and making a profit if I contracted all of the work. With a carpenter and a plumber, and me doing the electrical work we would all benifit and have a little profit at the end of the job to split. The nice part of the deal is that when the job is over your business relationship is also over. I continue to do small joint ventures and have a good circle of tradesman that I can call on should the project be more then I can handle. J.Lockard
  • agreements

    Andy,

    Have a partnership agreement.

    The PA is for GETTING OUT of a partnership. FEW last forever. YOu will be glad you had a legal pre set of rules for gettig out or getting your partner out.

    Steve
  • bill nye_3
    bill nye_3 Member Posts: 307
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    Don't Do It

    Think long and hard before you sign anything.

    I lost all my tools, all my inventory, my reputation, and my good name. I also lost a lot of sleep. Plus I lost a friend, my former partner.

    It started out with the best of intentions. After 10 months of waiting I got my old van back and some personal tools . I owned the van since 1994 but registered it to the LLC.

    I got out easy, it could have been much worse. I think if I stayed on my own I would still be in business and doing ok. I wanted to serve the customer, my partner wanted to get rich and retire early. God bless him, I wish him all the best.
  • hot_rod
    hot_rod Member Posts: 22,158
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    if you craft it properly

    before you start it can be a good way to go. there can only be one captain, be sure to determine at the outset who this will be.

    I'd do an org chart before you start also to see who does what.

    A good buyout agreement helps also. Then you have a legal, agreed upon way to end it if needed.

    Although if the partnership ends with bitter feelings even a legal instrument could need legal help and expenses to dissolve.

    Give my wife a call, she has first hand experience in this area. Especially with family business partnerships.

    hot rod
    Bob "hot rod" Rohr
    trainer for Caleffi NA
    Living the hydronic dream
  • tim smith
    tim smith Member Posts: 2,752
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    Partnership

    My partner and I have ran our company for 20 years, a few ups and downs but overall it has been a very good thing. Nice to be able to leave town and know things will be fine when he or I get back. We are two totally different people but have the same philosophy regarding quality and customer service luckily. As someone said, one person does kind of take the reins and beyond that all you can do is work with respect of each other to make sure no toes are stepped on in the process. Ask each other when a bigger decision is made but get the job done without too much deliberation because of the partnership. Just make sure you are not both too head strong or problems will occur. Good luck, Tim
  • Kevin M_2
    Kevin M_2 Member Posts: 2
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    partner

    I've been there done that!!! worked for a year and lost a friend out of it. Wouldn't do it again
  • [Deleted User]
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    I'm lucky like Tim in this respect...

    My business partenr is one of the best things that ever happened to me, and I beleive that we have mutal respect and feelings for each other.

    In the 8 years since our podnering up, we've gone from a 2 man shop to a 9 man shop, and continue to grow. We've had our share of good times, tempered by bad times, but it all works out in the wash.

    When I partender up, I made it perfectly clear that I didn't want to have to worry about the financial side of the company, that I would take care of the "working end" of the business. When I first started, I was exclusively in the field, and Tom stayed in the office. Today, that scenario has almost completely flip flopped. And we are trying to reel Tom back into the office.

    A major part of our success is being blessed with excellent employees. Thanks for all your help guys, we couldn't do it without you all.

    Look carefully before you leap. It's like getting married. It's not easy or inexpensive to break it off.

    You might be better off just working together independently for a while before you consumate the deal. Kind of like living with your girlfriend before your tie the knot...


    ME
  • Andy_22
    Andy_22 Member Posts: 2
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    Thanks for all your input. I knew that alot of you have had experienced this. The person that I am considering does have a very similar work ethic. Alot more questions at this point than answers though. I would not sign any documents for at least a year, may be two.
  • BAB
    BAB Member Posts: 118
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    Partnerships

    "Successful partnership" is a term stuffed/jammed in your face at weddings, family outings, bar scenes & cocktail parties. However, guys that have had a bad experience with a partnership are usually not proud of it, actually are very bitter about it, and, as a result, never talk about it. For every short lived, temporary, "good" partnership there must be 20 to 50 sour partnerships. Sounds to me like you are going for it anyway. Good luck.

    Hope you think real hard first and definitely not do it. You do not need it & it will not help you one bit. Let him invest in you, let him assist you, let him advise you, ... but do not compromise the successful efforts you have made thus far. You did it all before without him, you can continue to do so.
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