Taking on a Partner

[hawk 14]

I have had someone show interest in getting into the business with me. They have a relative that is also in the PW business and has a 3 rig company, ( not in this area ). This person would have contacts and a good work ethic. I've only been in business for 6 months.

Has anyone ever had this come up? How would you handle this? We are going to meet next Saturday to discuss the posibilities.

Any advise would be greatly appreciated.

Thanks,

Hank

[PressurePros 249]

My feeling is they are generally bad news and destroy relationships. I am not even sure how husband/wife teams sustain them in all honesty. Friends or relatives, forget about it. No matter how much you list strengths and weaknesses and who is bringing what to the table, one part of the partnerships always feel they are contributing more whether it be financially or in sweat equity. You will become liable to another person who may not agree that you need a bigger machine, a new pump etc etc. If you are the one in the field you will be resenting the fact that you are busting hump and the other person is just giving you an expanded customer database. The other person will resent that they are spending all the marketing dollars and have spent their time building that datatbase and they have to pay you exorbitantly to do the work.

Reconsider this idea or at the very least go in with your eyes open. Write a business plan. Do cash projections, income split formulation, write short and long term budgeting plans, have both sides write up a SWOT analysis and come to terms with everything WRITTEN before you agree. You can spend the next year working your tail off and you will not be the sole owner of your customer list. Be sure to label a preagrement when it comes time to split up and there is a 95% chance you will have to split off.

If you have six months in, tough it out. Get loans, max your credit cards get a part time job whatever. Do what it takes to make it ON YOUR OWN.

[Mathew Johnson 123]

My feeling is they are generally bad news and destroy relationships. I am not even sure how husband/wife teams sustain them in all honesty. Friends or relatives, forget about it. No matter how much you list strengths and weaknesses and who is bringing what to the table, one part of the partnerships always feel they are contributing more whether it be financially or in sweat equity. You will become liable to another person who may not agree that you need a bigger machine, a new pump etc etc. If you are the one in the field you will be resenting the fact that you are busting hump and the other person is just giving you an expanded customer database. The other person will resent that they are spending all the marketing dollars and have spent their time building that datatbase and they have to pay you exorbitantly to do the work.

Reconsider this idea or at the very least go in with your eyes open. Write a business plan. Do cash projections, income split formulation, write short and long term budgeting plans, have both sides write up a SWOT analysis and come to terms with everything WRITTEN before you agree. You can spend the next year working your tail off and you will not be the sole owner of your customer list. Be sure to label a preagrement when it comes time to split up and there is a 95% chance you will have to split off.

If you have six months in, tough it out. Get loans, max your credit cards get a part time job whatever. Do what it takes to make it ON YOUR OWN.

Ken, I agree. I almost took a partner on this summer. I was looking for someone who would be willing to come with cash and then co ntribute sweat equity. Right out of the box, the guy didnt want to put in the effort, just wanted to be a silent partner... I passed on his offer, it was hard, he came with a lot of cash

[John T 744]

I also debated over this summer in splitting up my business with my full time guy. It was a pretty decent cash offer that everyone I talked to about it said.."DONT DO IT!!!!"\

The deal was on the table with a time frame of a few thousand up front and the rest before the end of the year. It was easy cash and since at that time I had two guys working for me and about to hire another one it seemed like a great way to go so I can spend time expanding this business without just about ever doing the physical end(A business growth killer). In the end I pulled the deal off the table and shut it out of my mind.

Taking on partners just has to many downsides compared to the upsides and in any business plan thats not a direction that is recommended. If your head tells you one thing and your heart tells you another..then go by your gut instinct and see what that says...you already know the answer..

[Craig 111]

Bad idea! You will find that you are always better off on your own. I've taken on partners 3 different times and didn't learn my lesson!

[Camelot 68]

Run, Forest, Run!!!! I've seen partnership splits that were so ugly, police had to get involved. Ken is right, generally speaking it can ruin a business and a friendship fast. My two cents.

- John

[hawk 14]

Thanks for the replies. I will give it a lot of thought. It sounds good, but the results sound bad.

Hank

[Celeste 341]

Don't do it.........just narrowly escaped a situation recently and are sooooo glad.

Celeste

[Chappy 138]

I approached a good friend of mine that was starting to get into the business about a partnership. He had a successful business up north before nasty divorce ruined it, so I figured he could make up for some of my deficiences. He handed me a set of tapes from Christian Financial concepts. The tapes gave many examples about partnerships and all ended badly. Needless to say, I knew where my friend stood.

It would be better to get an investor or two instead of a partner.

[Richard 17]

Some one had to reply with the other side of the story.

About a year or more ago I opted to partner up with someone I've known 16 years. He has been in the pressure wash business the whole time. He kept his business and I kept mine. So where's the partnership?

He does primarily underground garages (washing & line marking), parking lots (sweeping & line marking).Knows how to repair all the equiptment.And has a ton of equiptment (airless sprayers,blowers,road sweeper,scafolding,

welders,line painter,.......)

I on the other hand am more into the residential (decks,interlock,house washes) commercial (gum & graffiti removal,high rise balcony cleaning.....).

I have equiptment that Steve does not. I am also more experianced in sales.

I guess you would say "We joint venture" We take on jobs that we wouldn't normaly get with out each other. A close knit referral within ourselves. So far so good. Will it last????????? Only time will tell.

NO!!! I would never take on a silent partner. And YES I agree that most partnerships are not going to work.

[John T 744]

Some one had to reply with the other side of the story.

About a year or more ago I opted to partner up with someone I've known 16 years. He has been in the pressure wash business the whole time. He kept his business and I kept mine. So where's the partnership?

He does primarily underground garages (washing & line marking), parking lots (sweeping & line marking).Knows how to repair all the equiptment.And has a ton of equiptment (airless sprayers,blowers,road sweeper,scafolding,

welders,line painter,.......)

I on the other hand am more into the residential (decks,interlock,house washes) commercial (gum & graffiti removal,high rise balcony cleaning.....).

I have equiptment that Steve does not. I am also more experianced in sales.

I guess you would say "We joint venture" We take on jobs that we wouldn't normaly get with out each other. A close knit referral within ourselves. So far so good. Will it last????????? Only time will tell.

NO!!! I would never take on a silent partner. And YES I agree that most partnerships are not going to work.

Thats a great post!! Joint Venture now I can see that working great and besides getting paid for each job done together you can still do your own thing and are not obligated to each other. On the other hand a partnership is like a Marriage and a disagreement.....well we all know the rest of the story.

[Ron Musgraves 240]

My best friend’s partner just embezzled 365,000 this year. Wrote checks to suppliers and actually cashed them himself.

Criminals are stupid, when did he think this one would be over. How about when the balance sheet didn’t match up?

I would stay out of partnerships. I would contract or have limited partnerships.

Possible pre negotiate a falling out agreement? If things don’t work have pre-breaking up clause in your partnership.