business partnership
Discussion
A current workmate and i are thinking about going it alone together.
how does this work? it would be a 50/50 split between us, but how do we / do we need to make a legal contract or anything like that? we know what we want to do,(MOT testing, service and repairs) and we think it wil be a sucessfull venture, but neither of us have done anything like this before. we have both just been employed by others and just turn up for work each day.
any advice or suggesitons would be most welcome!
how does this work? it would be a 50/50 split between us, but how do we / do we need to make a legal contract or anything like that? we know what we want to do,(MOT testing, service and repairs) and we think it wil be a sucessfull venture, but neither of us have done anything like this before. we have both just been employed by others and just turn up for work each day.
any advice or suggesitons would be most welcome!
"going it alone together" - something of an oxy-moron.
I agree about getting a partnership agreement (or a shareholders agreement if it's a limited company) but before you do that TALK A LOT. It's rather like a marriage, better to get the relationship and agreement right at the outset than to simply have a pre-nup and give it a bash. Make sure you get a lawyer to ask lots of "what if" questions - it's rather like drawing up a will except more complex (10-20 pages). For example, if your partner dies then his 50% will go to his next of kin. What if his next of kin is a madman (possibly the bloke who killed your partner!!!) Equally, one of you wants to sell in ten years but the other doesn't - what you gonna do? Or, maybe you disagree fundamentally over an issue and there's a parting of the ways needed - who stays and who goes and for how much? These are just a few of the dozens and dozens of scenarios a good lawyer should ask.
Incidentally, and this is what I tend to suggest, both of you take the forms away and fill them in seperately. Then get together and compare notes to see if you're thinking along the same lines. It can be quite an eye opener.
Lastly, good luck to you sir!
I agree about getting a partnership agreement (or a shareholders agreement if it's a limited company) but before you do that TALK A LOT. It's rather like a marriage, better to get the relationship and agreement right at the outset than to simply have a pre-nup and give it a bash. Make sure you get a lawyer to ask lots of "what if" questions - it's rather like drawing up a will except more complex (10-20 pages). For example, if your partner dies then his 50% will go to his next of kin. What if his next of kin is a madman (possibly the bloke who killed your partner!!!) Equally, one of you wants to sell in ten years but the other doesn't - what you gonna do? Or, maybe you disagree fundamentally over an issue and there's a parting of the ways needed - who stays and who goes and for how much? These are just a few of the dozens and dozens of scenarios a good lawyer should ask.
Incidentally, and this is what I tend to suggest, both of you take the forms away and fill them in seperately. Then get together and compare notes to see if you're thinking along the same lines. It can be quite an eye opener.
Lastly, good luck to you sir!
I echo the comments about the marriage. I even think it is a closer relationship than that (all be it non sexual!).
Also, make sure you have complementing skills. i.e. one is technical, one can sell. If you end up with 2 technical people or 2 sales people then you might as well be brave and do it on your own.
Also, make sure you have complementing skills. i.e. one is technical, one can sell. If you end up with 2 technical people or 2 sales people then you might as well be brave and do it on your own.
Agree with all previous bits, having been there and done it (and said partnership ended with a russian roulette clause being invoked) you really should make sure you have agreements in place and really know the other party very well.
Wouldn't change my experience as it taught me lots of lessons, but could really have done without the stress of it all, not to mention the hassle and cost of setting up another limited company again from scratch.
Partnership agreements and (if limited) probably agreement on income/cost splits with several different share classes if you are likely to bring differing levels if income to the company.
For a useful quick guide to all things partnership related just google russian roulette clause and the first result is a decent starting point.
Wouldn't change my experience as it taught me lots of lessons, but could really have done without the stress of it all, not to mention the hassle and cost of setting up another limited company again from scratch.
Partnership agreements and (if limited) probably agreement on income/cost splits with several different share classes if you are likely to bring differing levels if income to the company.
For a useful quick guide to all things partnership related just google russian roulette clause and the first result is a decent starting point.
I agree with all of the above, some other points - if you don't make a Partnership Agreement you'll be govered by the Parnership Act of (I think?) 1890 - which will give a 50/50 split. If one of you pops your clogs (as stated) half will go out of your control to his family.
Secondly, make sure you entirely understand your exposure financially. Either one of you can be helf fully responsible for any debts of the business - even if those debts are run up by your partner without your consent or knowledge.
Be very careful and make sure you know all there is to know about the risks.
Secondly, make sure you entirely understand your exposure financially. Either one of you can be helf fully responsible for any debts of the business - even if those debts are run up by your partner without your consent or knowledge.
Be very careful and make sure you know all there is to know about the risks.
Partnerships can be a fantastic thing if everything is agreed in advance.
Try and consider every possible scenario you are likely to encounter, and then discuss and agree the outcomes ie who is responsible for what. Otherwise small issues can become big issues and create tension.
Good luck with it
Try and consider every possible scenario you are likely to encounter, and then discuss and agree the outcomes ie who is responsible for what. Otherwise small issues can become big issues and create tension.
Good luck with it
Personally I'd go for a Limited Company, with equal split of the share allocation. It's safer for you both legally, as your risk is limited to the amount of money (or assets) you put into the Company.
If it all goes wrong, and if you've done your research properly you'll know the likelihood of this, then all you can lose is your investment. With a Partnership you can lose everything, including your home, as there's no limit to the Liability.
I've got this arrangement with 2 others (1 Friend, 1 Family!!!), but we keep the work relatively professional, have worked together in the past anyway, and have know each other for many, many years. We all bring different strengths to the business, but fully expect to challenge the others if there's something we either don't understand, or don't agree with.
Owning your own business isn't a 9 to 5 though, like a job. I'm sure you're aware of this, but it can be stressful at times, especially in the early days when you're struggling with Cashflow.
If it all goes wrong, and if you've done your research properly you'll know the likelihood of this, then all you can lose is your investment. With a Partnership you can lose everything, including your home, as there's no limit to the Liability.
I've got this arrangement with 2 others (1 Friend, 1 Family!!!), but we keep the work relatively professional, have worked together in the past anyway, and have know each other for many, many years. We all bring different strengths to the business, but fully expect to challenge the others if there's something we either don't understand, or don't agree with.
Owning your own business isn't a 9 to 5 though, like a job. I'm sure you're aware of this, but it can be stressful at times, especially in the early days when you're struggling with Cashflow.
I'm sure there is a place for good reliable servicing and repairs, no matter how many people are in competition.
Take the ideas put forward seriously, especially the what if scenarios - what if one of you is not pulling their weight? how are you going to deal with it? If you make the plans then when the plan is invoked either of you won't be surprised.
Good Luck.
Take the ideas put forward seriously, especially the what if scenarios - what if one of you is not pulling their weight? how are you going to deal with it? If you make the plans then when the plan is invoked either of you won't be surprised.
Good Luck.
Gassing Station | Business | Top of Page | What's New | My Stuff