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  • Providing equipment with a friend

    Hello, i just started a lawn care business this summer with a friend. We had our first mulching job this past Sat. We each got payed $100. However, for the business i am providing the Truck, trailer, walk behind, weed eater, blower tarp and storage. He is providing some shovels/rakes and a weed eater. How would you split the income? i thought about equally paying for the gass money and then i get 2/3 he gets 1/3? Any suggestions would be appreciated.

  • #2
    This is a great question and this is a reason why partnerships are all to often disasters.

    Because you are right, how do you go about splitting that up? It is very difficult to sit down with a friend and say, look I own the truck I need to get paid more. I agree you do, but it never seems to work out right.

    Here is my take and others can jump in as well.

    Right now, its all an experiment.

    Take money out to pay for gas and oil and whatever and then just split the income with him.

    Is it fair to you? No, but in the long run you will benefit because you are learning how to do all this and then who knows, maybe one day in the near future, you will go off on your own and run your own business.

    What's your take on that?
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    • #3
      Steve has a good point. Depending how "good" of a friend your partner is, you may want to sit down with him and explain to him that you have a much bigger investment. If he is not open to the matter than maybe you need to split before you get too deep..... If he is open to suggestions ask him how he thinks you need to split it. You may also suggest something down this line:

      Figure up what the total equipment investment is between the two of you, including the truck. Let's say you that hypothetically have invested 85% of the total equipment value and he has a 15% investment. Either pay yourselves a same wage, say $10 per hour, and then split the remainder up 85% to you and 15% to him. Or, split the entire thing up 85%/15%. Either of these may be an encouragement to your partner to start investing more himself and thus bring it close to 50/50. So if your job paid $200 and you split it 85/15 then you would get $170 and he would get $30. Yep, its a big difference but if that is the split in investment you deserve the same rate of return on your investment as he does. If it is only because he is unable to afford to make a greater contribution to the cause and you want to help him, that is up to you.

      Maybe you need to each throw, lets say 5%, of each job into a pot for expenses such as gas and oil for the truck and mowers. I suppose this money could all come from the owner of the equipment but at that rate the owner of that equipment needs to get more than his percentage because his equipment has recurring expenses that a rake and a shovel will never have (gas, oil, tuneup, and etc).

      Something that you need to remember, which is just general business, if your job paid $200 you need to set some of that aside for equipment repair or replacement. Long ago a friend of ours told my dad that if you own a business it is always either growing or dying. It is never at a stand still. Thus you need to always be investing money into it. This does not mean you have to spend money every day, every week, or even every month. But it does mean that some of your profits need to be used to grow even if you are saving it for that bigger trailer, bigger mower, 2nd mower, new trimmer, equipment to start a 2nd crew, or whatever.

      Hopefully your friend will be understanding and be willing to allow you the same rate of return on investment. If not, perhaps you need to seperate ways while you are still on speaking terms. Then you can still go fishing together...

      Sorry for the long narration but I hope it helps.....

      Eli
      Last edited by SuperiorPower; 03-10-2009, 11:35 PM.

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      • #4
        Great reply Eli. Very insightful.
        Northern California

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        • #5
          Doesn't (work)

          I have been in 2 partnerships in my life and both ended in disaster. The first one with unequal investment and the second with equal investments.

          Returning from my 3rd tour in Viet Nam, 8 of us had the opportunity to by a beer and wine bar in Jacksonville Florida. We each put in $1,500.00. Everyone equal so there would be no problems. Wrong!!

          After the novelty of ownership wore off, only 3 of the eight put in any time (work), but everyone wanted an equal share!

          At the start, we all agreed to take specific shifts. If because of duty conflicts (we all were still GI's), or any other reason the schedule couldn't be kept it was up to the problem owner to pay someone to take his shift. Only 3 of us kept the place open Monday - Saturday 10A -2+P.

          Equal investment is fine only when equal responsibility it present. With partnerships this is never the case.

          Don't take on a partner! Take on an employee!

          Steve


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          • #6
            I'm with Steve here man. Go it alone. I had considered taking on a partner in the beggining. It's a bad idea especialy with friends or family. You will in the end, end up either out of business or one buys the other out & you will not be on speaking terms when all is said & done. Buy a couple rakes & shovels now, & avoid the aggrivation & expense later. 2 People are never going to work "just as hard" as each other, it's never a 50/50 split on moneyinvested, time, effort, drive etc. This will be especially so if he doesn't have much invested. Above the mentioned figuring out what the percentage of investment is.... If you are just hell-bent on trying to make it work, I would figure it out & if it is say a 85% to 15% split worth say a total of $10,000 (using round numbers to make it easy) Then you have $8500 in & he has $1500 right? If he wants to be a 50/50 partner & get serious about business then he needs to ante up to a 50/50 investment. In this example he needs to give you $3500 to bring you two to an equal $5000 dollar investment. He needs to "buy in" to the company as a partner, right now he should be viewed as help.

            There will be problems later though too. There will be times when you see that you need to advertise to continue to grow. Maybe the ad you want to run costs $200 a month. But he's not as good with money so he's personally broke & doesn't want to give up his half of that expense. So now you either A) don't run it & don't grow. Or B) you pay the whole expense yourself.
            If you choose (A) your stagnant & he's holding you back. If you choose (B) & gain 5 new clients from that ad at say $100/month each
            (a total of $500/month) Does he get an equal $250 of that? You wouldn't have that business if not for you right? He didn't put in so what do you do now? If you cut him out he'll be pissed! IF you pay him equally then he just learned that he no longer needs to put in the money,effort, time, etc. because your going to do it all anyway & he can just sit back & collect.
            Not really a partnership now is it? Drop him him off now now before you get off the ground, cause by then your choices are drop him from way up there & watch him fall, or crash & burn with him.

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            • #7
              There will be times when you see that you need to advertise to continue to grow. Maybe the ad you want to run costs $200 a month. But he's not as good with money so he's personally broke & doesn't want to give up his half of that expense. So now you either A) don't run it & don't grow. Or B) you pay the whole expense yourself.
              If you choose (A) your stagnant & he's holding you back. If you choose (B) & gain 5 new clients from that ad at say $100/month each
              (a total of $500/month) Does he get an equal $250 of that? You wouldn't have that business if not for you right? He didn't put in so what do you do now? If you cut him out he'll be pissed! IF you pay him equally then he just learned that he no longer needs to put in the money,effort, time, etc. because your going to do it all anyway & he can just sit back & collect.

              Ahhh, very good example of what could happen. Like I said originally, both "partners" deserve the same rate of return on their investment. Invest little, reap little.

              I have been told that anythign with 2 heads is a freak and is dead already. You and I both know that if you are partners you will disagree and both of you think the other should see it your way. That is what I mean by having 2 heads.

              I agree with everyone else, go it alone. You may upset him now but he won't be as upset as he would be later when you cut him out of the profits that he did not help earn.

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              • #8
                This post brings up many good points.

                It is fascinating how often we as people when just getting started in the business world, don't want to go out on our own. We figure if we can get a friend to go along with us, that is great, as long as we aren't doing it alone.

                It's like a reaffirmation. If my friend feels we can do it, then maybe we can do it!

                So I think that is why many new businesses get started like that, especially when you are in your teens.
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                • #9
                  This post brings up many good points.

                  It is fascinating how often we as people when just getting started in the business world, don't want to go out on our own. We figure if we can get a friend to go along with us, that is great, as long as we aren't doing it alone.

                  It's like a reaffirmation. If my friend feels we can do it, then maybe we can do it!

                  So I think that is why many new businesses get started like that, especially when you are in your teens.
                  I thought about this thread yesterday driving back from an auction, I am a go it alone person, I think due to 18 years of banking and seeing issues with just about every partnership that came across my desk, only one person can drive the ship, doesn't mean you can't have a great first mate to help you.

                  I was taking the garbage out a week or so ago, a neighbour was out walking his dog, he stopped and we talked, he loves tractors and wanted to see the new unit, Jack is a super guy but when it comes to machinery he just doesn't have what it takes however he has the best looking property in our subdivision. He asked who would be doing our landscape design as he is retiring next year and has been thinking of offering this service and starting a business, I explained we would contract this out until we are big enough, he suggested we partner, I said yes however you start your own company and we will sub to you or if you are doing a job sub to us. He would have rather joined our company however I know that motivation comes when you have to push yourself to bring in the business and I do not want/need a partner other than my son as we have workied together since he was 12 and it always worked great.
                  Andy
                  Halifax, Nova Scotia

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                  • #10
                    Great help

                    Thank you for all the reply's. I am very surprised with the number of interest in this post. Every reply has some very valueable information. I think i am going to take the advise and try to go solo. It seems that everybody that has some business experience knows that you are digging yourself in a hole if you try to make it a partnership.

                    The only thing is that im in highschool and play football and basketball. I am pretty busy in the summer, but for the most part i think i can do it myself. I plan on getting 10 to 15 houses. If that means i have to work on Sat + Sun i will do that. However, i do have 2 adays for football and have team camps for basketball which will be very tireing and it would be stressful to balance both. I have an older brother who said he would help me when ever i needed it and i also have a brother-in-law who also said he would help, also. Besides who doesnt need some extra money with the economy the way it is? I dont want to get in over my head, but i do think i have the resources to do it.

                    I think i will print off some flyers with my name and number and if i need some help, i think it would be very easy to find someone. However, the hard part is, how do i tell my friend i dont need him anymore? We already had 3 of his neighbors lined up and already had a mulch job in his neighborhood. I would feel bad leaving him because this would be his summer job, but i think it would be for the better.

                    Any help would be appreciated, Thanks for all the help, Pat

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                    • #11
                      What I would do is eather buy his equipment from him or buy your own. Then you make yourself 100% owner and hire him as an employee and pay him for services by the yard.

                      It sure beats well I have this I should get that thing between you to and your partner and maybe stop future drama?

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                      • #12
                        i wouldmae this as simple as possible or you run the risko f loosing a friend and business. i would suggest sitting down and saying "ok we are going to charge x amount a hour we you and i both will make x a hour and the truck and equipment needs to make x to cover gas insurance wear and tear maint etc. basickly if you are charging 60.00 a hour then he gets 20.00 you get 20.00 and then truck and equipment get 20.00 if he is not agreeable with this then you need to stop before you get to far in or you will end up with the headache
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                        • #13
                          Personally I don't agree with having a partner. Someone needs to have the final answer always, it doesn't matter about the split (lets say 60/40) you will always have a conflict.

                          I first came up with my idea of getting into this business a few years ago, I talked it over with one of my old friends, we had big plans. I slowly saw his attitude change, & his opinions really got on my nerves. If I took him on, we would be in a constant power battle, arguing over who gets what etc. It's hard to tell your friend that he will be getting the lower cut, which could lead to problems.

                          If you ever go 50/50, get out of that!

                          An example of why:

                          Bob & Pat cut 200 lawns a week, they split the pay 50/50 at $10 a customer
                          vs
                          Bob cuts 100 lawns a week, he gets the total of $100

                          Going 50/50 is just silly, I recommend hiring workers... You can pay them peanuts if there students!

                          Don't hire people who are close to you, as in your best friends or family. I'm stuck hiring my best friends brother, it's going to be a disaster if I fire him if he sucks.

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                          • #14
                            Here is a reason to not go into a partnership that I don't think anyone has mentioned yet. This fact just hit me after I read the content in several other posts.

                            Think about it; you get the idea to start the business and share it with your best friend. He says, "hey great idea, lets do it". You start the business together but he will soon lose interest because he never was passionate about the idea. It was nothing more than a whim for him. For you it was a conviction. Even if it was nothing more than a whim for both of you(hypothetically), it is likely to wear off faster for one than for the other.

                            I believe it comes down to one having more "conviction" in the matter than the other. When I say "conviction" I mean that one of you really believes in it, the other is along for the ride because it sounds like a "good idea" and sounds like it should be a way to make a bunch of "easy money". But then when the other one finds out that there is money to be invested and work to be done, they are not so sure anymore.....

                            If a person insists on having his buddy having a vital part in the business, fine, just don't make him an "equal" partner. I dont believe there is such a thing as an "equal partner". One will always have to take the lead to a certain extent. Like a president and general manager of a company. Both of these jobs can be done by one person, but 2 people can not be president of the company..... Thus they have different responsibilities and should have different compensation.

                            Rather than being partners consider one having the business doing the mowing and the other the business doing other landscaping. Example: Mickey's Mowing does the mowing. Lonnie's Landscaping does the mulching. Today you have a yard to mow and the same customer also needs some mulching done. Mickey shows up and bids the mowing while Lonnie shows up and bids the mulching. Mickey finishes the mowing quickly but Lonnie is still doing the mulching and needs help. He says, "Hey Mickey, I'll pay you $50 to help me finish the mulching". Each has done your job and you subbed yourself to Lonnie for 3 hours of work. He collects for the mulching and you for the mowing. Lonnie pays you $50 for your labor.

                            This way if Lonnie is very passionate about his landscaping business but Mickey decides he no longer wants to mow then Mickey can fold his business and Lonnie is still in business. Or Vice Versa. This way you each have your own business. When one needs help you subcontract the other to help you and vice versa. I think this would allow you to do it all but protect you from the partnership thing. This would also allow both of you to feel in control of your own businesses without being partners and having to butt heads. I suppose you may still have disagreements here and there tho....

                            I hope my rambling makes sense.

                            Eli

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                            • #15
                              How much mulch did you install for a 100 bucks?
                              DJ Carroll
                              EasyPro Property Services
                              502-525-3279

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