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Question about "business partners"


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  #1  
Old 07-29-2007, 12:41 AM
JODY84
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Hello everyone! I have learned so much from this site so far and we are very excited to get our business started soon!

Thanks for everything!

BUT-

I'm a bit concerned about the whole business partnership issue. You see, my husband and I have 8k that we are putting into the company, everything from equipment to the insurance. We are paying for everything. But he has a friend who has a lot of experience in the landscaping biz and he knows clients who would be intrested in our services. Anyways, my husband wants him to be our business "partner" but I really don't feel the need to have a partner. He plans to break down the profits as follows:

50 % profit goes back into company (more equip, advertising, etc)

25 % profit to my husband and I

25 % profit to our so called "partner"

Does this seem fair to you?

What would you do in our situation?
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  #2  
Old 07-29-2007, 02:55 AM
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Quote:
Originally Posted by [b
Quote[/b] ]You see, my husband and I have 8k that we are putting into the company, everything from equipment to the insurance. We are paying for everything. But he has a friend who has a lot of experience in the landscaping biz and he knows clients who would be intrested in our services. Anyways, my husband wants him to be our business "partner" but I really don't feel the need to have a partner.
I don't think you need a partner for this. What kind of experience does this partner have that he is bringing to the table?

Quote:
Originally Posted by [b
Quote[/b] ]50 % profit goes back into company (more equip, advertising, etc)

25 % profit to my husband and I

25 % profit to our so called "partner"

Does this seem fair to you?

What would you do in our situation?
I think most businesses shoot for 5 or so, maybe a little higher for marketing expenses. Others may disagree with me and want to spend more but I'd say that is the target.

What other equipment would you need through out the year? I'd try to keep as much money as I could and not spend it. If I needed a larger piece of equipment for a project, I would rent it. Troy may jump in here, but he will tell you how he went out and spent a lot of money on equipment when he got going. That was 5 + years ago? and he is still trying to get over that.

What are you foreseeing you will need to spend 50% on?
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Old 07-29-2007, 06:43 AM
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I have a bit of experience with having a partner. My first mowing & landscaping business was a 50/50 split with responsibilities delegated to our particular strong points. It went well for the most part. We went into it as best friends and still are, even after 20 years, a not so common ending to such a partnership.

If I were to take on a partner again, everything will be in writing, no handshake agreements. Money spent with an attorney is well spent in this instance. Cover all the bases as only a legal mind can.

I may be wrong, but a couple of reasons for taking on a partner could be based on some insecurities you may have in your endeavor. Its reassuring to have somebody on board that has been there, done that, to avoid the pitfalls common to the business, or any other business for that matter.

Capital is always an issue, especially start up costs. Again, having another on board can help raise the needed cash, but remember, its very possible that an experienced partner could structure payback to his overwhelming advantage w/o you realizing it.

You are probably correct in questioning the need to have the "friend" on board. Is this person a friend or an acquaintance? There is a big difference in the quality of the relationship, especially over the long term and when the going gets tough. Will he bail out, sue you, damage what you work hard for?

You are on the right tract by having a plan and asking questions. Everybody experiences trepidation in getting off the ground. Everything I have read so far from you points in the direction of success.

Be conservative in your spending, rent instead of buying seldom used equipment, and ALWAYS ask questions.
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Old 07-29-2007, 06:59 AM
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Quote:
Originally Posted by [b
Quote[/b] ]I may be wrong, but a couple of reasons for taking on a partner could be based on some insecurities you may have in your endeavor. Its reassuring to have somebody on board that has been there, done that, to avoid the pitfalls common to the business, or any other business for that matter.
I think you totally nailed it here. I give you 5 gold stars for this comment I agree this is why most new business owners go in with a friend. Jody, remember you and your husband are already going to be partners on this, taking in a third person is going to make it even rougher. That is my personal opinion though.

I don't think it is worth taking on another person to partner up with for their 'connections' or 'experience', when you have access to forums like this where others can give you their insight.

I can remember years ago, me and my friends would talk about businesses all the time and there was this feeling like if you want to go in on this, I will too. It's like we all needed each other to reaffirm that yes this was a good idea and it was going to work. If my friend felt the same as me, then it must work right? That was the mind thought at least.
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Old 07-29-2007, 12:23 PM
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I have never used a partner, I guess because I have always had the ability to foresee potential problems, so I always avoided partners. When I needed any help with something, I would pay a friend to give me a hand for the day.
I would not be able to make it if I could only keep 25% of profits. Working for myself, I get to keep about 75%.
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Old 08-04-2007, 11:39 PM
JODY84
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Thanks so much for the response! We actually sat down and talked to the other guy and he will just be one of our employees, so I feel much better about that! He's a hard worker no doubt but I didn't think just that should make him a partner but more as a top employee or something.
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Old 08-05-2007, 02:46 AM
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Keep us posted on everything goes. I am feeling better you had that talk too.

I think things will work out better this way.
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