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Side Business

2K views 12 replies 8 participants last post by  TxElectrician 
#1 · (Edited)
I'm planning to start a small utility business in a trade I specialize in for 10 years. I would like to expand one day and purchase a hydro-Vac unit.

I also have a good friend who's a hard worker but with little experience who wants to go halfers on purchasing the hydro-vac.

I don't currently need any help with my business but I think he'd be great for the hydro-Vac business.

What would be a reasonable partnership agreement? How do I make it fair to the both of us?

I don't know how busy I'll be until I start so that's part of the dilemma.

Am I being greedy? Should I wait? Or if the iron's hot, strike? Any idea?
 
#2 ·
Kind of hard to understand but you do or don't have a utility business right now? As for the hydrovac what would be your "partner's" interest in going half if he won't be part of the business? Does he want to start his own business? How would you divide up the time the machine is used between the two of you?

Sounds like you just want him to pay for half the machine for you to use unless I'm missing something. I will say that partners and joint purchases never seem to work out. I've tried a few times and always ends in both parties being upset. On rare occasions partnerships do work out but it can be a struggle. I for one will never have a business partner again.
 
#3 ·
I just started a business but I'm waiting until I get laid off in a month to start it.

I know all about the business I'm in and he knows very little so I don't want to give him half of my business. Maybe I would consider 60-40 and train him. But I see it as a long play so I'm not inclined to give a large portion away.

The more I think about it, the more I think partnership is dicey and maybe patience is my best bet. I'd still like to help him out but I don't want to give up half my business and don't know how else it's fair.
 
#5 ·
This is what I think is fair:

I keep 100% of my current business and create a new 50-50 partnership with him and pay him $20/hr to start. I might be too busy to do the jobs but I'll handle all business.

Basically I only make money if we're profitable and he's guaranteed money unless we're very unprofitable in which case it fails.

Any thoughts?
 
#6 ·
Why not ask him, is he looking to be a partner in a business or is he looking to be an investor with a return on his money?

At the same time ask yourself do you need his help to purchase the unit?

What ever you do make sure everything is crystal clear and in writing up front. Don't want to go into something like this on well I thought, and he should have known.
 
#9 ·
I wish you luck. I've seen so many partnerships fail. Right now, I can't even think of a successful one. At least not the 50/50 partnerships. 70/30 partnerships, now that's another story.

Keep in mind, by your own admission, he has no experience. You are going into a partnership with someone that can contribute nothing except money and holding a shovel down. He might be a hard worker and a great person, but when the first job comes in, you will be doing the work and he will be standing there watching. Or at the most, doing the job of a $10 laborer.
How many years will he need to work under you, in order to get to the point he can go run jobs on his own?

I've been there. Almost exactly there. A side business with a partner. I thought it was a good idea. I have no idea why I thought that. After the first project, I did 80-90% of the work and he got 50% of the profit. Was a great deal for him. I can't even count how many times he told me he was a hard worker.

The more I think about it, 50/50 is a huge mistake. If he can contribute 50% of the work along with 50% of the money then things would be different.

My opinion only.
 
#11 ·
I've said it before. My brother and I started out as partners after my dad passed. Lasted a couple of years before it completely fell apart and we stopped speaking for 7 years.

Brother came to work for me 13 years ago and we are now closer than ever and hasn't even
Been a disagreement since we started again. There can only in most cases be one decision maker. I've seen a couple of partnerships survive but as many others have said they usually end badly. I wouldn't do it




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#12 ·
I fully understand and appreciate the people saying not to do a partnership. That is the reason I'm not interested in giving up any of my other business.

However, I'm only one person, I only have limited credit and I realize that I could probably use a lot of help to be successful.

It's not that I'm not confident in myself, it's that I see this as a way to expedite the growth of the business and hedge my bet on my other business which services utility/construction companies. I also see a lot of spin off business from that one but there's no way I could do both by myself.

Having a partner would make hiring help, multi-tasking and getting business much easier but maybe patience is a virtue?
 
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