Going Into Partnership - Second Thoughts

[workid1]

Im currently in the process of setting up a small business with one of my friends. Originally I thought it was a great idea to go into partnership (again) as he has many qualifications in taxing and employment/business law. The nature of the business requires a service from either me or him. Problem is, I know all about the service we provide, as I am passionate about it and enjoy it massively. He on the other hand knows nothing about it, and is relying on me to teach him. This worry's me because he isn't passionate and as caring about it as I. Not only that, but the reason I wanted to start it in the first place is because I have a decent job where I work nightshift and can have a little sleep most nights. So I am able to work through the day on this pretty much every day. He on the other hand works through the day 9-5 and works most weekends, so it will pretty much be me working all the time.

My question being, with it being a lowish startup cost and considering I can do the work myself, should I go it alone instead of a partnership?

[Quattromaster]

In my 15 yrs of running my own company I have made many mistakes, yet the only 2 I really regret is going into partnership , I know I know, why I didn't learn the first time I'll never know.

My advice, if you can do it on your own, then do it.

[Doofus]

Are his many qualifications in any way relevant to the service you intend to provide? If you know everything about the service, and he knows nothing, then presumably his qualifications are of no consequence.

There must have been a reason for considering a partnership with him. What was it?

[workid1]

Doofus said:

Are his many qualifications in any way relevant to the service you intend to provide? If you know everything about the service, and he knows nothing, then presumably his qualifications are of no consequence.

There must have been a reason for considering a partnership with him. What was it?

We were just talking over the course of a few weeks about which industry we'd like to end up in and low start up company's etc. He was just there and because we both agreed on the type of business, he was enthusiastic and said things to suggest he was apart of it. Before I had a proper chance to think about what was best for me I was in too deep. Nothing is legally official yet, but as he is a close friend I know he will take it personally If I now tell him I don't want/need him.

I was in a previously in a partnership with a family member and got royally f**ked by them. I should have nipped it in the bud right from the start.

[lost in espace]

workid1 said:

Im currently in the process of setting up a small business with one of my friends. Originally I thought it was a great idea to go into partnership (again) as he has many qualifications in taxing and employment/business law. The nature of the business requires a service from either me or him. Problem is, I know all about the service we provide, as I am passionate about it and enjoy it massively. He on the other hand knows nothing about it, and is relying on me to teach him. This worry's me because he isn't passionate and as caring about it as I. Not only that, but the reason I wanted to start it in the first place is because I have a decent job where I work nightshift and can have a little sleep most nights. So I am able to work through the day on this pretty much every day. He on the other hand works through the day 9-5 and works most weekends, so it will pretty much be me working all the time.

My question being, with it being a lowish startup cost and considering I can do the work myself, should I go it alone instead of a partnership?

Bite the bullet. I was in the same position, organic growth with 5 partners. After our first meeting I decided we couldn't go forward, and cut 2 of the others out. They were unable to devote the time required.

[workid1]

lost in espace said:

workid1 said:

Im currently in the process of setting up a small business with one of my friends. Originally I thought it was a great idea to go into partnership (again) as he has many qualifications in taxing and employment/business law. The nature of the business requires a service from either me or him. Problem is, I know all about the service we provide, as I am passionate about it and enjoy it massively. He on the other hand knows nothing about it, and is relying on me to teach him. This worry's me because he isn't passionate and as caring about it as I. Not only that, but the reason I wanted to start it in the first place is because I have a decent job where I work nightshift and can have a little sleep most nights. So I am able to work through the day on this pretty much every day. He on the other hand works through the day 9-5 and works most weekends, so it will pretty much be me working all the time.

My question being, with it being a lowish startup cost and considering I can do the work myself, should I go it alone instead of a partnership?

Bite the bullet. I was in the same position, organic growth with 5 partners. After our first meeting I decided we couldn't go forward, and cut 2 of the others out. They were unable to devote the time required.

Yeah I totally understand why you would do that. I'd do 75 - 80% of the work for him to own 50% of it all.

[jammy_basturd]

Quattromaster said:

My advice, if you can do it on your own, then do it.

This,

Pay him for his services if you need to.

[Simpo Two]

Eventually you will fall out and one partner will do a runner leaving the other with all the debt. 'Jointly and severally liable' etc. Great when one party is a CC company, not so great when it's you.

[akirk]

It seems that your main issue may be lack of time from him to put into the business...
the lack of passion may just be one person's approach - doesn't mean they wouldn't do the work...

if you are good enough friends that changing the plans could upset him, then you are presumably close enough to sit down and share concerns?
perhaps you need to draw up a plan for the business - include in it your targets (customers / income / etc.) and the expected inputs (cash / expertise / time)
do it with him and draw it up with a column for your inputs and a column for his - if he doesn't think it inequitable then you need to make it more obvious
then suggest:
- not going on together
- splitting equity differently
- splitting cash take differently
- etc.

[Splats]

This post is a major red flag to me. If you are having doubts now - and they seem well founded - then I can imagine things will only get worse from here on. Set up the business and run it on your own terms and sub-contract services to him. If he lets you down you can easily go to the market to find someone with his qualifications to employ or contract out to.

I've been royally bitten in the ass in a 3-way arrangement and would be very careful about getting into business with others again.

[Frimley111R]

jammy_basturd said:

Quattromaster said:

My advice, if you can do it on your own, then do it.

This,

Pay him for his services if you need to.

+1. Been there too and its very hard, unless both of you work 100% on the business, not to see the other as not putting the commitment and effort in you are. If you can DIY then do it, you can always add people later to the business.

[Monkeylegend]

workid1 said:

I was in a previously in a partnership with a family member and got royally f**ked by them. I should have nipped it in the bud right from the start.

Just read this back to yourself a few times.

Better to upset the friendship at the start than the end.

[Johnniem]

workid1 said:

Yeah I totally understand why you would do that. I'd do 75 - 80% of the work for him to own 50% of it all.

Then why not agree that you own 80% of the firm and he owns 20%. If he proves more useful than at first expected then you can always up the ownership percentage on his side. Presumably the purpose of you going into business at all is to be rid of the jobs you currently do? If this is not the case then why do it at all?

JM

[KevinCorvetteC6]

Johnniem said:

Then why not agree that you own 80% of the firm and he owns 20%. If he proves more useful than at first expected then you can always up the ownership percentage on his side. Presumably the purpose of you going into business at all is to be rid of the jobs you currently do? If this is not the case then why do it at all?

JM

Because he is talking about a partnership, not as easy to do as it is with a Ltd. company.

[Johnniem]

KevinCorvetteC6 said:

Johnniem said:

Then why not agree that you own 80% of the firm and he owns 20%. If he proves more useful than at first expected then you can always up the ownership percentage on his side. Presumably the purpose of you going into business at all is to be rid of the jobs you currently do? If this is not the case then why do it at all?

JM

Because he is talking about a partnership, not as easy to do as it is with a Ltd. company.

I am a partner in a company and it is quite normal for partners to agree the percentage ownership of the individual partners when a new one is appointed, I am pretty sure it doesn't all have to be equal. Perhaps an accountant will be along shortly to confirm.

[sgrimshaw]

KevinCorvetteC6 said:

Because he is talking about a partnership, not as easy to do as it is with a Ltd. company.

Just as easy.

It's not an equal split between my partner and myself.

[MrJuice]

If you are doing 75-80% of the work, perhaps you should own 75-80% of the company. No one will grumble about that and if they do, they will be an awful business partner.

I think there is value in having a partner but it all depends on what the business is. If you don't need him, politely ditch him. If you need him a bit, hire him in as and when. And if he will be helpful, then keep him as a partner on sensible percentage terms.