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Tips on a partnership?

10K views 65 replies 37 participants last post by  nEighter 
#1 ·
Im in the process of discussing a partnership with a friend. We are not best friends, so its not like going in business with family. We have similar interests in Solar, and are bother Journeyman electricians. I think we both bring a lot to the table, but both with strong points that compliment each
others. We plan on writing up a very professional partnership, and having a lawyer look at it. We have not figured out a percentage, but have discussed 50/50, good or bad idea?

We want to format the company to where if either of us is in the field, we get paid a fair wage, but i will probably be in the field more, and him running the paper side a little more. But both staying involved in both. We will also establish the percentage that goes back into the company, and then share profit. He will probably get the license, being he is a little older, (im 23, and he is 33), but we will put it under the corporations name. Im looking for tips on what mistakes you have made with partners.
We both are very motivated, and realize its hard with the economy now, but we other jobs, and will do this slowly. any advice in general will help, do's and donts, "dont forget this"... you know?
 
#38 ·
CNC,
I would defidently advise against it.
I was in a partnership (not contracting) and it was not a great situation.
Of all the members here it seems as though there are very few are a part of a partnerships.
Drawing a paycheck for yourself can sometimes be difficult, let alone drawing two. This is just one example. Trust me when I say there will be many more.
Just my .02
 
#40 ·
I hear everything evryone is saying.... i guess my situation is a little different. My overhead is low, im young, and i dont have much to lose. We are both already fully equipped for what we want to accomplish, as far as tools go, and trucks are staying seperate from the business. We will of course be spending money on graphic design, website, insurance, and maybe a small rental, and office area, (which we currently are already renting for personal use for cheap.)
I dont have an option to do this on my own at 22, i have 5 years expericence is highend residential, where im the asset to the residential stuff we want to do, and he is an industrial electrician. We will seperate jobs in this manner, and i will run the residential stuff, and him the industrial commercial stuff. He is 10 years older then me, and is the qualifying partner for the license, and is very business savy, has lots of connections. He values me for my hard work, and experience i bring to the table, and contacts i have. I would have to jump through hoops to get my license, being a young journeyman.

My investments will be my Solar licensing, and time spent trying to generate work, not too much overhead. If it fails, i miss out on lots of time spent growing it, but feel like this will be a great experience, and i will learn alot, and hopefully it works out. What am i overlooking in my situation? i feel i dont have much to lose? Other then us formatting a VERY SOLID contract covering everything, exit agreement, our share in the company will be the initial money we come up with, and NOT be 50-50. We will decide on whats best.
 
#42 ·
I would have to jump through hoops to get my license, being a young journeyman.

My investments will be my Solar licensing, and time spent trying to generate work, not too much overhead. If it fails, i miss out on lots of time spent growing it, but feel like this will be a great experience, and i will learn alot, and hopefully it works out. What am i overlooking in my situation? i feel i dont have much to lose? Other then us formatting a VERY SOLID contract covering everything, exit agreement, our share in the company will be the initial money we come up with, and NOT be 50-50. We will decide on whats best.
Although I'm not a fan of partnerships for myself or my clients, I say give it a shot. Try it for a few years until you can get your own license and don't have to worry about the CSLB labeling you a "young journeyman." Give me a shout out at that time and I'll help you get your license. Then you can put every penny of profit in your own pocket.
 
#43 ·
Your in CA, I'm in CA. I've ran into this before.... both of you get your own licenses.. if he needs help on your end.. he pulls your labor/exp and pays you for it..end of story. partnerships... hahah goodluck... i been thru that road many times.. not worth the money, headaches and ruined friendship over some b.s. Just keep it simple.. if he needs you to help on a job, or you need his help on a job..pay him for his time.....
 
#52 ·
Your in CA, I'm in CA. I've ran into this before.... both of you get your own licenses.. if he needs help on your end.. he pulls your labor/exp and pays you for it..end of story. partnerships... hahah goodluck... i been thru that road many times.. not worth the money, headaches and ruined friendship over some b.s. Just keep it simple.. if he needs you to help on a job, or you need his help on a job..pay him for his time.....
well put.
 
#44 ·
I took on a partner on the remodeling side of the business. He did real nice work and needed the job, and he was a neighbor. Lasted 5 months. He was so slow it was sad. I finally started helping him and it worked out I was doing 2/3 the labor to his 1/3. He was supposed to bring in business also, but the only thing he had on the books was 2 small bathrooms, about 3 - 4k each.

One fine morning he tells me he's going to do the bathrooms by himself and any work he booked he would do on his own. I tell ya, I felt like God just gave me a gift. He did maybe 3 jobs after that and damn near starved to death. Always wanted to know if I had any work I'd be willing to send his way. Had to tell him we tried the partner route once and it really didnt work for either of us. No more partners for me.
 
#59 ·
To me, entering into a partnership would only happen if the other party is offering something segnificant (damn misspelling..) to the overall goal of the company.

There are a lot of unforseeables related to partnerships. Are you and the other party a good fit? Would you hang out with this person(s) if it wasn't business related? Are they similiar to you in your pursuits?
 
#64 ·
Here are some rules I live by when building a partnership:

  1. Try to find two or three other like minded people; I find teams of 3 work best.
  2. Be willing to give new partners the benefit of the doubt, especially if don’t know them yet.
  3. Encourage communication and run all your important ideas by them.
  4. Be self-directed and take independent action day-to-day for the benefit of the project; expect the same from your partners.
  5. Be open and honest about how you feel — but do it constructively and for the benefit of the team.
  6. Try to keep the balance of power equal at all times. Ensure no one abuses their power.
  7. If you feel the balance of power is shifting either someone is taking too much or someone is participating too little, act quickly and assertively to resolve the problem.
  8. When it’s time to dissolve the partnership make sure you have everyone’s, not just your own, best interest at heart.
 
#65 ·
A partnership is just like a marriage, it is never 50/50. Keep it light and work together without being partners. Create a "point system" where each person get s a percentage of the profits from each deal based on how much work they did. For example, getting customer is 10 points, Doing work is 2 points per hour, ordering is 5 points. That way you can see who is really doing the work. Most partnerships are one person just tagging along. better to pay as you play and split all cash based on work done for THAT job.
 
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