Partnership

KellyPainting

I've been tooling with the idea of bringing in a partner. I am good with the painting part but suck w/ the money part...I've been in buisness for over a year now and have all the insurances ..t-shirts..truck..lettering but still not on the books...don't even know what I make cuz I pay everything..
always live week to week and never have any $$$$ capital. So I've found a partner... with a investment... and a good backround for money managment ... she's also a colorist and a decorator... she understands good quality work and wants to advertize alot. She's extremely trustworthy...weve decided on a 70/30 split and I get up and run the company... she does all the math/books/money plus she has a verry succesfull buisness of her own and is one of my oldest customers.."she actually has me work for her without an estimate..Bill me..she says" she's a widower and wants to get into something to add for her retirement. she wants us to buy everything in bulk rollers/naps .. everything in quantity to get it cheap, and she dosent mind paying for it. She's got alot of contacts and will do my buisness well.
I know what your all going to say..... but go ahead
I WANT YOUR OPINION....

rws

Do it.

Brushslingers

Might just be the star to kell. It's worth a try eh?

You could even do a new LLC with her business and kellstar as partners.. to protect your company itself... that is after all, what LLC's were supposed to be for, partnerships. Don't have to change a thing except run it through the partnership corp first to get profit/loss.. etc et al....

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Benn

KellyPainting

Her name is star....starlette..... lol
we came up with the logo together 6 months ago... when we first started talking about this.
A lawyer already suggested a LLC..... I think thats our best bet

Flawless Finish

Is she hot? J/k. Sounds like a good deal for the both of you. I know you said she is a colorist and a decorator, but does she know that much about the painting business?

Are you currently always booked?

ProWallGuy

A business partnership is like a marriage without sex. Numbers show that most fail. How did you arrive at 70/30?

I'd think real hard before jumping into that one.

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Wallpaper Hanger St. Louis
Digital Murals Installation

KellyPainting

she's actually owns a salon.... and understands color very well... I've sponged painted for her many times and all of her ceilings have 10% wall color in them...all her rooms are chocolate.. deep red....

I've been lucky to be booked in advance but am slowing down lately... only a month ahead of time.... it's not just that.. how long can i keep up this buisness without being on the books.. living week to week...
she will form our company.. costs alot..with lawyers and such... hire a bookkeeper... put in around $10,000 or so .. and pay me $5000 for goodwill.... to pay my depts.... she was one of my first customers and thinks I'm the greatest painter in the world.

steve-in-kville

Here's my take on partnerships, coming from a real estate point of view: Any partner getting more than an honest interest rate for thier money invested is very risky... I was warned early on to have a divorce plan in place in case one the the partners wants out. A good attorney can provide some better advise here.

I obviously don't know this person. You do. Keep in mind a worse-case-scenerio. What if...

steve

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George Z

Go through all the necessary business steps to do that.
70/30 means you make all the decisions?

For example:
"she wants us to buy everything in bulk rollers/naps .. everything in quantity to get it cheap"

I never understood that concept.
If sundries are about 3% (or less) of the direct costs, saving an additional 20%, would save you 0.6%.
At the same time, it becomes inventory and the logistics of managing it
is something you don't want to get to(for $15.00 savings per job).
At the same time you turn sundries into overhead instead of a cost of goods sold.
Which means you can't directly charge it to the job,
which would be the best way to recover your $15.00.
Point is: you may need an accountant and an investor, not necessarily a partner.

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Painting Toronto Blog

Double-A

Something she is missing is that tying your money up in supplies is wasted money.

For instance, let's say you spend $1000.00 on supplies to cover the next year of painting.

Day 1 - debit to checking account $1000.00.

Day 365 - No activity on $1000.00 investment.

Now let's say you put that $1000.00 into a savings account.

Day 1- Credit to savings account $1000.00

Day 365 - Current balance $1040.00
Day 730 - Current balance $1081.60
Day 1095 -Current balance $1124.86

Now, the argument that you save the time and gas needed to go buy this stuff might seem to be a valid one, but when you consider you have to purchase the materials for the job anyway, paint, flowtrol, thinners, strippers, etc., you can see that the time and fuel savings are a wash.

I agree that what you need is a good part time bookkeeper and an accountant. Both can be hired as professional services. Heck, contact Deb and see what she wants to do your books and get you started.

You can use QB pro and do much of this in a short amount of time if you pay someone to do the initial entry for you.

One other thing, 30% interest in your future is not the same as 100% interest in your own ass.

She might be genuinely concerned and a wonderfully giving and caring person, but she will never care about your success as much as you do. Take her on as the newest member of your client-advisory board, but I'd steer away from taking on a partner in a one-man-show.

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"My clients’ wishes are the center of my attention." -- David Guido, a contractor in Woodstock, N.Y.
New York Times, July 20, 2006

rws

Do it

KellyPainting

good advise....

steve-in-kville

Thinking about this a little further: wouldn't this be considered a limited partnership... where you would be the general partner and the other would be a silent partner?? That way, you rule the roost, but the silent partner benefits from the profits??

Just something to think about....

steve

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AFI

go go go......

Art

painterjim

Think long and hard before entering into a partnership. You say that you are living week to week and have no idea how much you're making, that's not a good thing, how have you managed to stay in business to this point?
If you're not sure about the question I posed above, how do you expect to have enough profit now to cover the additional cost of bookkeeping, attorneys, etc?
She wants you to buy bulk sundries, but that is just plain bad advise, interrupting cash flow is never a good idea. It seems from my perspective that you have been barely treading water since you've been in business, and that you are looking for a saving grace in the form of a partnership.

You're good at the painting part, and thats a good thing, but having someone else in the ballgame handling all your money because you don't know how can be a recipe for disaster.

lornmastro

i too am struggling with the business end of this business..but i'm working thru it.i agree with all the previous advice...had a partner(informally once..we had a major falling out...and was so glad we were NOT legal partners).you would be stuck with her...i agree with the hiring a bookkeeper to set up quickbook. maybe have her handle the decorator/customer hand holding part. i feel as a woman in this business... she would be a benefit...i really believe that since i will sit with a customer and help them pick out colors/sit and chat/send them larger samples of color/hold there hands makes me different, and in business different is better or so i 've been told. most of my customer are SCARED TO DEATH of picking the wrong color...in that way she can help but i would hire her not give her part of the business.also if you are feeling overwhelmed with all this business stuff i been helped by SCORE...theyare retired business men who will help you out and the best thing about it ,is, its free.also read e-myth it was a real eye opener for me...i was NOT a good business woman. someone once told me that to look at it as trying to eat an elephant..the inital task looks so overwhelming but if you just take one bite at a time you will eventually have the whole elephant eaten...has kept me from freaking out over the whole process.good luck

Debookkeeper

I HAVE to jump in here, and I am going to be redundant

"Partners are made for dancing".

I would try a different avenue first. Perhaps try this partnership without legally binding it first. If she is good at running a business and managing money, then bring her on as an office manager! Working for someone (you said she is a client) and working with someone is a totally different ballgame. It sounds to me you just need a powerful office manager/bookkeeper, and it will be A LOT cheaper! Heck, if you are eventually netting 300k a year, and she gets 30%, that is 90,000 a year to be a money/business manager. That's 43.27 an hour. Where are you located?? I'll take the job!!!!!!!! What I don't understand, is from your original post of her being good with the business aspect - why would you also need to hire a bookkeeper? This will cost you even more! Please please think this over carefully. I can't stand to see anyone put all the physical labor and time into their business just to collect 70% of what they are working for.

Double-A

Good food for thought.

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"My clients’ wishes are the center of my attention." -- David Guido, a contractor in Woodstock, N.Y.
New York Times, July 20, 2006

KellyPainting

without booring you too much.. here's the rundown....

I started this buisness a year ago.. I didn't even have a car... got droped off at jobs or had helpers drive me...I would tell the customers that "My guys going to do some touch ups.. and will be back to pick me up"
I didn't have insurance or anything........ Now..present day.. Fully insured
got t-shirts.. new truck...haven't realy advertized yet...and am still booked ahead of time...started with a Home depot account... using behr
work almost every day..... just have alot of bills ... and not great w/ handling money..managing it..... buisness has been good I've ate everyday
and my rents been payed... still got a $4,000 home depot bill I pay every month on top of everything else ..just wish I could get into my truck and go paint...w/out all the headaches..... ow ya.. and I'm still not paying taxes.... got to get it all together... form a company and handle all the cash flow the proper way.... you think all I need is a bookeeper? or a buisness manager?.....or what?.....please tell me

AAPaint

Honestly, I don't think you need anything else at this point besides a license and a copy of quickbooks... You are doing exactly what I did, but I had a vehicle.

You are not alone starting with almost nothing. Just focus on what is working right now. You are at the point where you just need to bare down and carry the load. While you're paying off those credit accounts, set aside a couple hundred bucks and get your licensing.

Quickbooks is not extremely complicated to understand. Start off by putting your basic info in and you'll eventually get a good grasp on how it handles things...Then you will finally be able to tell what's happening with your money. If quickbooks is too much to start with, get a basic ledger going on paper so you know what's up with what.

My serious advice is to just get a grip on where you're at now. There is more you can do on your own to move forward. Start setting up systems for everything from how you receive payments to what you do with estimate requests and making customer files, etc.

Build the backbone of your business, and keep moving on the work you're doing. I know that big payoff sounds good, but you don't know your own business now, letting someone else have control of any part of it at this point would more than likely be a bad idea, IMHO.

This is what I've done for the past 2, almost 3 years now. I started with no license, insurance, shirts, signs, biz cards, website, door hangers, etc. etc. but I couldn't imagine someone else stepping in to what I've built with any kind of authority. I can barely handle the odd part time helper I use here and there.

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-AAPaint

AA Quality Painting & Pressure Washing LLC
Jacksonville Painters
Jacksonville, FL.