View Full Version : Partnerships
12-09-2004, 12:09 PM
hey guys....im in the process of starting my own landscaping and snow removal business with a buddy of mine. ive heard its a bad idea to start a partnership and that we should go on our own. But i have a few years of college level business courses under my belt and he has a lot of landscaping experience so i figure well make a good pair. Weve been friends since we were little kids and we will be able to make compromises and get along for the sake of the business as well as the friendship. Is there anything we need to consider before making the business official/legal in order of taxes or liabilities or anything? does anyone have any advice?
thanks a lot
12-09-2004, 12:40 PM
you'll get equal parts "do it" / "don't do it". that's for you two to decide, weighing your friendship as the key. it's the easiest way to lose a friend and you'll ultimately discover things you never knew about them, for the good and bad.
if you do it, form an official partnership, and absolutely be sure to draw up a list of Roles & Responsibilities. clearly define each item and that will definitely help. this cannot be understated. it's been my experience that this is the typical downfall of a partnership, along with "best" use of money. make sure you keep the communication completely open so that you are both on the same page. we, as entrepreneurs, have a lot of ideas in our own heads, yet unless it's communicated effectively, don't think that your best friend can read your mind. basically, it's like being married.... only worse. ;)
since one of you is the biz guy, and the other the trade guy, be sure everything is divided up evenly. it can be fluid, through amendements to the R&Rs, but try to set it in stone to begin. given the 2 backgrounds, i've experienced on my own and seen happen to others, that inevitably someone thinks the other is not pulling their weight as we often think our role is more important than the other. keep each other involved in each end of the business, even including a role or 2 that crosses-over so that you both gain relevant experience.
even things such as simple as taking a long weekend vacation can put strains upon who's pulling their weight. plan for those sorts of things up-front so that they don't build problems as you go.
i'd also recommend having an attorney help you out.
best of luck.
12-09-2004, 12:50 PM
I'm studing Bus. Admin. right now at ASU. Here is my advice. Do not start with a partnership. Start as a corporation or LLC. Depedning on large you paln to take your company there are benefits to both. An accountant can outline them for you because tax law is always changing. It may be more benficial to start it now rather than wait till 2005 you'll have to get that info. Corporations get double taxed, drawback, but liability is limited to the corporations assets rather than personal. Corporaions can issue stock and bondsto raise capital. You loose some if not a lot of control this way but it can get you cash needed for growth. There are specific regulations pertaining to corporations such as quaterly reports and such that you'll need to follow.An accountant and attorney should definately be brought in to help advise you. Draw up a business plan if not already done to show them where you want to take yourselves and how you plan to get there. Partners is great in theory. Business is business though and friends or not you have to do what's in the best interest of the business. I also recommend cross training in each others areas of expertise. While it may seem like you need not know about lawns if you are an office manger it helps in understanding what types of conditions crews are facing and gives a good idea of how long things take to do adn so forth so you will be able to catch things like them sticking an extra 5 gallons of gas onto the company gas card into their own cars or taking too long between jobs. Another piece of advice, don't try to expand too fast, that is where guys get burned as well as underpricing. You came to the right place to ask questions so the two of you should read as much as you can here.
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