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Dave does lawns
08-20-2011, 11:47 PM
I know partnerships are 99% destined to failure. :hammerhead:

My History:
Two years and 33 accounts, Average $50/hour
Limited money = slow growth.


His history:
Started this spring, Hired a guy who almost lost everything. That hired guy is gone.
Has spent $30,000 on equipment.
Only one account priced at $33/hour, 14 hour job.

Now only reason I am considering this is he has the equipment that would allow me to grow to a full schedule and then some, if I can find the right employee. I would take care of everything from mowing, billing, quoting and machine servicing. He may occasionally work the odd half day here and there but he works 15 hour days somewhere else.

talks on the table, I get $25 / hour or $3000/month whichever is greater.
We are both 50%.
Business will pay him back the current value of his his near new equipment and then be owned by company as funds are available..

My hesitation is this, If I am the only one working and building the business, I don't see how or why I would give him 50% of anything once the business buys his equipment from him.

Now I know that buying his equipment for cheap would be in my best interest but that is not an option. He don't want to sell and I don't have the money.

Should I consider this, and what % stake should he be entitled to?

Rednekdaddy
08-21-2011, 12:23 AM
Sounds like a good deal except for one thing. If it's your sweat that is building this company do not give him an equal share! You need to keep controlling interest! offer him say 40% ownership that way you are still in control! That way if the company grows he can't come in and start making decisions with out your approval. But that is just my opinion. I think that is why most "partnerships" fail, battleships aren't commanded by co-captains are they?

Dave does lawns
08-21-2011, 12:30 AM
Thank you Rednekdaddy.

Anyone else, Ill take the good and the bad, will not hurt my feelings I guarantee you.

knox gsl
08-21-2011, 01:05 AM
I wouldn't do a partnership, no one to answer to. I would just keep going like you are and buy some used equipment over the winter.
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RodneyK
08-21-2011, 08:53 AM
You are giving up 50% just for some equipment and one account. Stay on your own you will get there before you know it and own 100% of it. Partnering up for the equipment is the most expensive way to buy equipment.

FoghornLeghorn
08-21-2011, 11:33 AM
Don't do it. I had a partner who went in half on a trailer and $3500 of echo handhelds for 2 crews. He was supposed to be the business development side of it, I was the field supervisor.

Long story short, he brings in just a few accounts (all were below the rate I quoted him, he felt he had the right to adjust prices just to get business. All were slow pay, etc.) He worked maybe 8 hours a week while he worked around his other job's schedule, never picked up his phone when I had a question about jobs.

Meanwhile, I'm working 16 hour days on his shitty no pay jobs, driving all over the region to these god awful apartment complexes spending a metric ****-ton on diesel and labor.

Then, he has the gaul to question why we're spending so much on diesel, oil changes, materials.

My advice is to keep your day job for steady income until your landscaping takes off enough to give you a decent income. There's nothing worse than having 100 crap customers below market rate. You're always busy, grumpy, and poor when you try to work for poor people.

Take the time to be picky about what work, what customers you take. There is definitely something to be said for slow, controlled growth...

JB1
08-21-2011, 11:46 AM
sounds like somebody is gonna get screwed.

Kelly's Landscaping
08-21-2011, 12:46 PM
Iv had a successful partnership for 9 years and I expect 20 more. What you just described will fail and I am 100% sure of that. If he expects a share of the profits then there is zero need to buy his equipment. Why would you ever expect to be compensated for the purchase price of a company you were buying into.

If he's to be a silent partner I.E part time then he is buying into your company if you pay him back for his equipment then he has been bought back out. Now if he puts up his equipment then you 2 split the profits minus your pay check and HIS when he does work he would get paid by the hour as will you and that could work.

Id drop the whole 25 an hour stuff those numbers can get to large to fast pay your self and him what you would expect to pay some one of your ability's to work for you. It's probably going to be 15 an hour perhaps even less but you will also want to be paid for your office time your shop time your drive time doing all the errands that go with running a business. Fixing stuff buying stuff trips to the bank you get the idea once you take on a partner you've become and employee and need to view your self that way. A very important employee but one none the less so now your pay checks are solved what ever is left after expenses would be your profits and split accordingly to who owns what percentage.

Think long and hard on this it's easy to set up and a nightmare to end I am just giving you some tips on what is fair and what will work.

joshman108
08-22-2011, 04:01 PM
You said it yourself. Why pay him equal when hes not doing anything?

The simple answer is no. Think long term not short term. Save up for some equipment yourself, as I am doing (and yes it sucks waiting) but you will be happier knowing that you did it all yourself and are a free man.

Then you are free to higher if you want for alot less money

JC lawn care
08-23-2011, 08:38 PM
What youíre talking about doing is what I did a few months ago,

He had the equipment and I had the labor.

The way we set it up was an investment %. We agreed on a current value of his equipment and any labor he put into the business (IE: he is a small engine repair shop). Then we determined the value of my hourly investment.

Over time the equipment becomes less valuable and the amount of time I put in generating clients and managing the finances grows.

The company pays me an hourly rate for the actual mowing and pays him for any repairs he does.

Initially He owns a higher % of the business but as the company grows he receives a less % of the profits.

Another point is that as his equipment gets replaced it is replaced by the company profits.

There are a lot of other levels in the agreement but the bottom line is that he will receive a nice check each month for his initial upfront investment but over the course of 2-3 years he will be fazed out of the company.
This is something he is aware of upfront and has no problem with due to his profits until then.

The most important thing we did was have an accountant and an attorney write up the partnership agreement so it as fair for both of us.

The #1 reason partnerships fail is that one person gets hosed big time.
Going the way you described it you would get hosed very quickly.

larryinalabama
08-23-2011, 08:43 PM
NO NO NO NO NO oh did I say NOOOOOOOOOOOO

hackitdown
08-26-2011, 08:08 AM
Lets see if I understand this...you buy his equipment for full price on an installment plan with money you generate from your customers and your work. Then he gets 50% of your business. WTF?

Go to a bank and get a loan and buy equipment if you need equipment that bad. Or if he wants to sell but "doesn't need the money", let him finance the deal, you pay in installments.

bmlawns
09-01-2011, 11:41 AM
Forget the partnership and take his one and only account. You should at least be able to buy any additional equipment you need with profits from that account.

SLMGT
09-03-2011, 10:18 PM
You don't need this guy or his equipment. He really brings nothing to the table. He may even be willing to let his equipment go cheap in a couple of months. Build your own business and let this guy do his own thing.:usflag:

dslc
09-03-2011, 10:42 PM
The only ship to be on is an ownerSHIP. a partner ship will sink. there are at least 3 companys in my area that didnt make it on a partner ship, and one of the two gets shi*ed in the end only one partnership i know of working is the biggest lco in town. 3owners one owns the lawn maintence. one landscaping. and one irrigation. BUT someone is always selling there share usally about every 3-4 years