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  #1  
Old 08-20-2011, 11:47 PM
Dave does lawns Dave does lawns is offline
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Join Date: Apr 2010
Posts: 260
Parntnership

I know partnerships are 99% destined to failure.

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?
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  #2  
Old 08-21-2011, 12:23 AM
Rednekdaddy Rednekdaddy is offline
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Join Date: Apr 2010
Location: Great Falls South Carolina
Posts: 38
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?
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Old 08-21-2011, 12:30 AM
Dave does lawns Dave does lawns is offline
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Posts: 260
Thank you Rednekdaddy.

Anyone else, Ill take the good and the bad, will not hurt my feelings I guarantee you.
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  #4  
Old 08-21-2011, 01:05 AM
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knox gsl knox gsl is offline
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Location: knoxville, tn
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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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  #5  
Old 08-21-2011, 08:53 AM
RodneyK RodneyK is offline
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Location: Fort Wayne, IN
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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.
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Old 08-21-2011, 11:33 AM
FoghornLeghorn FoghornLeghorn is offline
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Location: Austin, TX
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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...
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  #7  
Old 08-21-2011, 11:46 AM
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JB1 JB1 is online now
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Location: From the hills of beautiful Southern Indiana
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sounds like somebody is gonna get screwed.
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  #8  
Old 08-21-2011, 12:46 PM
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Kelly's Landscaping Kelly's Landscaping is offline
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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.
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  #9  
Old 08-22-2011, 04:01 PM
joshman108 joshman108 is offline
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Location: St Louis
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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
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  #10  
Old 08-23-2011, 08:38 PM
JC lawn care JC lawn care is offline
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Join Date: Aug 2011
Location: Greater Kansas city
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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.
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