Partnerships with friends???
Discussion
I set up a Limited Co with a friend and a friend of a friend a few years ago. It didn't work out, but I did get out with my original assets intact and the friendship just about so. Friend lost his marriage over it. Two of the three didn't commit totally from the outset; too busy with funded other work in their own rights. By the time they did commit money was running out and opportunities missed. Had some real bust-ups with friend over lots of issues, technical and business. Fortunately we were good enough friends to laugh it off over a pint or two on an evening before locking horns again the next day. If our friendship hadn't been 25 years old and robust it could have been nasty.
Wacky Racer said:
mc_blue said:
Partnerships don't work in my opinion. I would argue that personally with family members it would be a bit more likely to work but not with friends.
I've been in partnership with my (younger) brother and we have never had a crossword in nearly 30 years.......
That's good to hear - long may it continue!
Me and my best mate run our Ltd company together. We're an IT projects company but most of our time is spent contracting.
We've known each other since uni and have worked together and separately before setting up our business. So far it's been plain sailing, we're both pulling in good cash and neither takes the mickey. Lean spells between contracts are few and far between but there's cover for the other if one of us ends up between contracts for any period of time.
In our circumstances there's very little cost to our partnership and, as we can always go find our own work, very little risk.
the risk vs rewards is the thing you'll have to put a price to.
We've known each other since uni and have worked together and separately before setting up our business. So far it's been plain sailing, we're both pulling in good cash and neither takes the mickey. Lean spells between contracts are few and far between but there's cover for the other if one of us ends up between contracts for any period of time.
In our circumstances there's very little cost to our partnership and, as we can always go find our own work, very little risk.
the risk vs rewards is the thing you'll have to put a price to.
Ive got a Partnership with a mate. But hes very hands off and im very hands on. Works well for us. I would imagine it you were both hands on this could lead to disagreements, arguments, fallings out...
We have legal agreements, contracts etc... in place.
I would personally prefer to be in business with a friend rather than a stranger.
We have legal agreements, contracts etc... in place.
I would personally prefer to be in business with a friend rather than a stranger.
One thing I'd strongly advise is getting a decent lawyer to draw up a shareholders agreement. Apart from being good housekeeping, the lawyer will ask lots of "what if" scenarios (similar to a will but more complex). That way a 3rd party is asking the awkward questions: "what if you fall out?", "how will you value the company if one party wants out and the other doesn't?" etc...
Edited by srebbe64 on Tuesday 13th February 12:09
BoRED S2upid said:
Ive got a Partnership with a mate. But hes very hands off and im very hands on. Works well for us. I would imagine it you were both hands on this could lead to disagreements, arguments, fallings out...
We have legal agreements, contracts etc... in place.
I would personally prefer to be in business with a friend rather than a stranger.
We have legal agreements, contracts etc... in place.
I would personally prefer to be in business with a friend rather than a stranger.
Hi Steve,
Could you eleborate on agreements and contracts. Are these drawn up by lawyers and signed by both. Who decides when one is not fulfiling their side of the agreement or has broken contract. Also, whats the legal status of your business if you don't mind me asking. Thanx
Thanx everyone for advice.
itstony said:
I'll try and explain the situation in more detail. I have been in a position to go into business for the past year. The things which have held me back are firstly the capital I have to invest into my chosen business and the fact that i couldn't find the right property. It is because of this that I am looking at alternative business's. The business which I'm looking at starting now is is in a line of work which my friend has more first hand experience. I'm hoping he will take more of a leading role in the practical side of the business and in management. He's also well connected with people who would be very useful to know and is the type of person who can talk to anybody and everybody and is very confident. In comparison, I think that I'm more business minded and am better at dealing with the planning, innovation and implementation. Ideally, we would work like two peices in a jigsaw but I have my other concerns. His background is that he's quite wealthy but his various bonds and investments won't mature until he is 24, although he still lives very comfortably without them. Whereas I'm more quiet and reserved, hes part of the in crowd, which is good in that it brings a lot of wealthy contacts and potential clients. However, my concerns with this are that he hasn't had a job for over a year and lives his life sleeping late and doing f'all, then if he goes out he is known to enjoy casual cocaine taking. For example, one sitaution which I won't want happenning is if he starts this business with me but still has the idea to put play before work, and drop the load on me. Basically, my other friends view of him is that he needs to sort his life out soon and I'm hoping this business can be a turning point in his life.
What are your oppinions on my friend. One more thing though. This friend who I've mentioned above. His brother is my best friend and has a mindframe similar to mine and who thinks his brother needs to sort his act out.
What line are you in? Maybe if you're doing some London media wank, then your feckless, trustafarian mate with a predilection for the columbian nosebag and like some rilly good contacts might be an asset.
Now I have mates who are some, but not all of the above at the same time, but sounds like a disaster to me.
Or am I being too harsh?
Eric Mc said:
A limited company is not a partnership - legally.
Anyone going into business with someone else must make a careful decision as to what the best vehicle is for their business should be - a partnership, a limited company or a limited liability partnership.
Anyone going into business with someone else must make a careful decision as to what the best vehicle is for their business should be - a partnership, a limited company or a limited liability partnership.
Yup, I'm aware of that.
My main point - and, as usual, you're absolutely right about getting proper advice on the structure to use - is that working closely with friends can be good.
On the other hand my Dad has had a number of Partnerships go south when the other half of the business either siphoned off cash or did business on the side that they'd both worked at building. He works int he financial sector though so maybe it attracts the dodgy types.
itstony said:
BoRED S2upid said:
Ive got a Partnership with a mate. But hes very hands off and im very hands on. Works well for us. I would imagine it you were both hands on this could lead to disagreements, arguments, fallings out...
We have legal agreements, contracts etc... in place.
I would personally prefer to be in business with a friend rather than a stranger.
We have legal agreements, contracts etc... in place.
I would personally prefer to be in business with a friend rather than a stranger.
Hi Steve,
Could you eleborate on agreements and contracts. Are these drawn up by lawyers and signed by both. Who decides when one is not fulfiling their side of the agreement or has broken contract. Also, whats the legal status of your business if you don't mind me asking. Thanx
Thanx everyone for advice.
We own a Pub. So 50 / 50 partnership (Not limited company) so all agreements with brewery, bank, contracts etc... are signed by both parties and lawyers. All profits are split 50/50 and any additional finances are 50/50 if one of us decides to quite the business the other automatically gets first shout to buy the other out etc...
I guess other businesses could be more complicated than this. Get the lawyers involved to protect both of your interests.
mc_blue said:
Wacky Racer said:
mc_blue said:
Partnerships don't work in my opinion. I would argue that personally with family members it would be a bit more likely to work but not with friends.
I've been in partnership with my (younger) brother and we have never had a crossword in nearly 30 years.......
That's good to hear - long may it continue!
I forgot to add 'cos he does what I tell him.........
BoRED S2upid said:
if one of us decides to quite the business the other automatically gets first shout to buy the other out etc...
I think this point is one of the most important in any partnership situation, and wonder how would the business be valued in this situation? Is there already an agreed value, or would both parties have to accept a valuation done by somebody else?
singlecoil said:
BoRED S2upid said:
if one of us decides to quite the business the other automatically gets first shout to buy the other out etc...
I think this point is one of the most important in any partnership situation, and wonder how would the business be valued in this situation? Is there already an agreed value, or would both parties have to accept a valuation done by somebody else?
It would normally be done by an independent accountant. The problem starts if the remaining partner can't afford to buy the other one out.
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