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Partnerships... enough said right?

ncsvoboda7
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ncsvoboda7 Enthusiast

ncsvoboda7

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So I am entering a partnership and have found there is a horrible stigma out there about partnerships. Just wanted to get some input from your own experiences good and bad? Why have you had good or bad luck with a partnership?

cdhowell Enthusiast

cdhowell

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I think it is ok if EVERYTHING is put in writing first. The duties of each partner, the return expected from each. Who has the final decision of a conflict. As well as an exit statagy.

weighit Enthusiast

weighit

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How you going to protect your business should one of you have a tragic auto accident and someone gets killed or seriously injured? What if one of you get divorced and the ex-wife wants her half? How are you going to protect cash that might not hit the books? If you think your both always going to agree your not thinking this through. When only one person is in charge, that person controls the day to day operation as they see fit. When two of you are there it may become a head butting issue when you disagree on whatever the situation was. It sometimes is hard enough when you have a manager that is head strong and wants things done differently than the owner, let alone when the other has his money invested. You also need to write right at the beginning, how it will be divide should one of you decide right away, or 20 years from now they want out. I went through a lot of this when I was contemplating a partner, decided the only partner I wanted was the one I sleep with, my wife. Even then there were some issues we didn't agree on, but since we were married we always worked it out.

ncsvoboda7 Enthusiast

ncsvoboda7

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I'm not asking after I'm working on forming the partnership as we speak and yes that is exactly what I'm doing, paying big money to an attorney to set up a legit partnership that spells everything out before hand.

ncsvoboda7 Enthusiast

ncsvoboda7

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Also if your corporation is set up so that everyone is 50/50 owner of the shares of the business all decisions have to be passed through both owners not just one!

ncsvoboda7 Enthusiast

ncsvoboda7

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Ya I'm nor blindly trusting an attorney I have a lot of experience and a college degree in business so I am also going over everything with a fine tooth comb.

ncsvoboda7 Enthusiast

ncsvoboda7

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If you cannot agree what happens then? In my opinion 50/50 is the worst because no one is in control.

It definitely takes the most discipline and I think that is why people dont like partnerships, people partner just to partner and not because they need what the other partner can bring to the table. You simply have to learn how to compromise for a greater benefit in the end.
ncsvoboda7 Enthusiast

ncsvoboda7

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Here was the bottom line for me. I did not need what the other partner brought to the table but "I thought I needed it". The partnership was my way of dealing with my own lack of experience and my own uncertainty.

Well said and I guess maybe that could be the case for me too but I guess I will never know until I'm a few years down the road with this.
Elon Block Community Regular

Elon Block

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Nate,

 

You've gotten some great suggestions here. It all boils down to:

What happens if...

 

You say you are meeting with an attorney. Hopefully, it is someone that

specializes in small business partnership arrangements, like you are

talking about, so he/she already has a big checklist of..

What happens if...

 

Here are a couple of real life "What happens if..."

If you are the person in charge of operations and you want to purchase an
alignment machine? Or hire or fire an employee...

How is the decision going to be made?

For example...
My wife and I are business partners and we have clear guidelines we have

developed that help us make the decisions for both of our businesses.

On some things, she has the final say. On others, I have the final say. These

guidelines are based on our individual strengths.

 

So, partnerships can work exceptionally well as long as clear expectations are

set in advance.

 

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John Pearson Collaborator

John Pearson

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Nate, Like XRAC said you have youth on your side. Trust me I wish I had someone with a bag of money backing me though the addition and expansion that I am going through right now. But at the end of the day when you can sit back and say that I did all of it, I made it happen and it's MINE, thats pretty cool.

Dont be afraid to fail, success is even more scary.

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Hands On Community Regular

Hands On

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Ya but this all can be solved by simply writing it all out and agreeing on it before hand.

ya I mean just like a treaty right, those always make everything better at that point.

 

The point is at some time there is going to be a conflict and you cant just pull out a peice of paper and expect both parties to go " oh yeah, silly me, i forgot about that" and the problem magcally goes away. And to say that there will not be any problems is to play ignorant. Some of the best marriges end in divorce.

 

Now I am not wishing the worse for you, but by preparing for the worse, we can usually end up surviving it. It is just that a partnership is in my opinion already starting out in a pretty bad spot and there is not a long fall to the worse that can happen.

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Hands On Community Regular

Hands On

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So say we have a partnership that is properly formed do you guys see pros or just cons in a partnership?

Only cons, if you consider financial assistance a pro then your getting your financing the wrong way. If you see the partner as a pro because he is going to be an employee? he is not an employee, he is a second business owner. One thing that might help is if you described exactly how this partnership is going to function. Are you both mechaincs? Are you both going to be present and working. How much do you both expect to pull out from the business, and how long do you both think it will take to make that money. Are you both depending on this business to pay both of your bills? What do you envision the pro's to be?

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