Considering partnering up

Discussion in 'Business Operations' started by Fubba, Jan 31, 2013.

  1. Fubba

    Fubba LawnSite Senior Member
    Posts: 356

    I manage/operate one of the largest residential companies in my area. (Pop ~ 35k, rural, 60ish cust.). I do all the the scheduling and all the foreman work for the company. There are two other employees who work part time. We're all friends. I ran my own company before and during college but left that behind when I went to grad school. I came back and started working for this company. He wants to partner up. He's a full-time minister at a local church where I volunteer a lot of hours myself, but he doesn't have much time for the business. Basically, the deal is this: I pay half of what he wants for the business (30k), and I get all the equipment, truck, and trailers.

    1994 Dodge Ram 2500
    7X16 Horton Hauler
    7X20 Flatbed Trailer
    60" Exmark Lazer Z
    48" Exmark Lazer Z HP
    2 Stihl FS-100
    1 Stihl KM-130 with hedge trimmer and edger attachments
    2 Stihl BR 600 blowers

    We profit share. After all costs, we'll leave 7% in the bank for emergency funds, he takes 23% and I take 70%. He wants to stay in another 5 years, and I will have the option to buy him the rest of the way out or stay in it with him. He will handle the billing/books, and I will continue to do pretty much what I do already.

    Based on just maintenance and no extra work, my pay would increase by 20-25% including the payment on the note I would need to take out for the business. It seems like everything would be better than it is now for both of us. Does this seem like a fair deal? Do you guys foresee any hiccups or problems?

    Business brought in 102k last year.
     
  2. Patriot Services

    Patriot Services LawnSite Fanatic
    Posts: 12,711

    You won't find many partnership success stories on here, but plenty of horror stories. I would offer to buy him outright. Money down and a portion of profits for a set amount of time to protect against mass canceling. Oh and a no compete clause.
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  3. larryinalabama

    larryinalabama LawnSite Fanatic
    Posts: 16,793

    Dont do it!!!!!
     
  4. memphis.landscape

    memphis.landscape LawnSite Member
    Posts: 140

    Like patriot said offer to buy him out in full. Pay $15,000 up front and then a set amount each month. But if you do go through with the partnership pay $300 to have a lawyer draw something up. When I started out I had a partnership and had nothing in writing and it ended very badly.
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  5. TX Easymoney

    TX Easymoney LawnSite Platinum Member
    Posts: 4,071

    I like him staying in for several years...it keeps him tied to the company
    If he's committed, then he HAS to try and make it work....if you buy him outright, it's; see ya... later dude, not my problem...and make him sign a noncompete when he exits.
     
  6. GreenGuysLC

    GreenGuysLC LawnSite Senior Member
    Posts: 325

    Partnerships destroy friendships. I have been there and done that. Also know plenty of others that have as well. I honestly cant say i know of any partnerships that have had good long term success.... especially with this setup....u doing the work...and he does the books....and we all know what you are thinking....he is a really great friend and a minister...and we would never argue. Well.......like i said..... been there.. done that....
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  7. nightshutter

    nightshutter LawnSite Senior Member
    from UT
    Posts: 513

    Like others have said. Try and do it own your own first. Buy him out. I'm sure some partnerships can work out but I've never heard of one working out in this industry. I'm sure he's a good guy but get a lawyer. On the plus side he is willing to stick around for a bit.
     
  8. Pietro

    Pietro LawnSite Senior Member
    Posts: 857

    It sounds great, but Id shy away from partnership. How did he come up the $30K? Heres how I view it. How much is the equip worth? The accounts around here dont sell for much because theyre not guarenteed forever. For $30K you could buy some better equipment and start your own company, so for me its not a great idea. For him it would be great...he gets some nice money up front, and keeps getting a little kick every month. If you value your friendship dont do it. Sales of $102K sound great. However, after all your expenses its not enough for 2 different people to live off of. Just be careful in whatever route you take.
     
  9. lawnkingforever

    lawnkingforever LawnSite Bronze Member
    Posts: 1,280

    I would not do it under any circumstances. I have been offered to partner up on two different occasions. Both companies were a bit bigger than mine. In both I would of got the better end of the deal, still will not do it. Money has a way of changing things when it comes to relationships.
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  10. jrs.landscaping

    jrs.landscaping LawnSite Silver Member
    from Maine
    Posts: 2,716

    Agreed, everyone has different opinions on things, how to spend money, which truck, which mower how the routes should be done etc....
     

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