Only for those who have a partnership, please

Discussion in 'Business Operations' started by nobagger, Feb 1, 2006.

  1. nobagger

    nobagger LawnSite Gold Member
    from Pa
    Posts: 3,065

    I am buying out another lawn care company (smaller one) but I want to become partner's with another guy who has many atributes that he could use in my business now. But one thing that kinda bothers me is that he would be more of a "silent partner" due to his day job he can not contribute much, if any time in the field in any capacity. A 50/50 partnership is, in my mind unfair to me. He wants to buy into half of the business but other than $$$ he would be able to contribute some sales and connection's but that cant count for much, right? I could really use some good professional advise. PM me if you are able to help. Thanks in advance, Brian.:waving:
     
  2. promower

    promower LawnSite Bronze Member
    Posts: 1,232

    I wouldnt do it, the only thing he has to offer is a little money. Sounds like he's trying to buy into a company you started and sit back on the side lines and collect 50% of the profit. Partnerships rarely work out. I can guarantee you will start kicking yourself when your splitting profits and your puting in 60 hour weeks and hes putting in 15 a week.
     
  3. skurkp

    skurkp LawnSite Member
    Posts: 248

    I understand your concern, I have a customer that I do a lot of business for and he keeps telling me that he wants in on the business. He has the money and lots of it, he wants to do the same, no turf time just sales. He does not want 50% but if he does not get any properties right away I am giving money away. I would have to teach him to bid and any other aspect of the business. I have enough equipment to run two crews now although I don't. I have a problem with the fact that I have built this company to what I have now and don't really know if I want to have the headaches of a partner. As I am now I don't draw a pay check, I just allow the company to pay for everything, I am growing and have put a lot of work into it, just as you have. If you a going to purchase another company and it's contracts I would not pay for any contracts not in writing. No guarantees. Equipment and signed contracts only and I would look at his books and see just how much the other company is putting away. Good luck.
     
  4. specialtylc

    specialtylc LawnSite Bronze Member
    Posts: 1,656

    Im in a partnership business, been 9 years now. We both work with the crews. All money is split 50/50. I do all of the bookkeeping. My partner does most of the equipment maint. As it works out we average about the same number of hours worked per week.
    I wouldnt give 50% of my profit to a silent partner. He may be bringing some capital monies to help the buiness grow, but its not worth 50% of the company. I think 25% would be more than generous on your part.As long as he puts in at least 20 hours labor per week. Less hours = less percentage. What ever you do in this type of situation I would have a partnership agreement draw up.
     
  5. Norm Al

    Norm Al LawnSite Bronze Member
    Posts: 1,227

    sales and business savy are a HUGE part of a companys success!

    you pull a salary and then you guys split from the net!
     
  6. Lawnshow

    Lawnshow LawnSite Member
    Posts: 35

    Be very careful. I have seen several Lawn Care companies in our area take on partners and "team up." These companies were sucessfull on their own in the begining, but wanted to get bigger by taking on a partner. Usually they cannot get along and after the first season they go down in flames. Then they have to start over and the costs of attorneys and downtime kills both partners. It usually seems great in the begining, but money will always be an issue. My .02 tell me that you can run this thing with out a partner. Stick it out. If you are sucessfull, I found that everyone wants a slice of your pie.

    I guess my advise is you built it, run with it and see where it goes. You are in control of your own destiny at that point. You don't want to be the one who is putting in 100hr weeks while your partner is sitting doing nothing. Things will fall apart fast, trust me. I have been in business for eleven years. I have had seveal other LCO's (Some larger and some smaller) want to go into partnerships on either some accounts or splitting the comany with the dreams of getting bigger and increasing revenue. I have always looked at the deals, but never will I give up what I have worked for and give it to someone else and try to survive on 50%.

    Just my .02 Best of luck.

    Jim
     
  7. nobagger

    nobagger LawnSite Gold Member
    from Pa
    Posts: 3,065

    One nice thing is he is SILENT.lol, Honestly he is going to be silent, I already spoke to him and before I got to the part where I say "We are going to run things my way" he finished the sentence with that. He has no lawn care experience but has a passion for it. But he is very business savey and has many connections and $$$ that will only make my business grow into something that I could never get (in the next 5 years) size wise. My biggest stump is how much is he worth? I wouldn't think that I could only give him 15 or 25%, or could I? When we buy this company out, after this year he will be paid back 3 times over....then what? Does he invest more money for a new truck or other equipment? Thats again, where I am stumped. Any help appreciated.
     
  8. specialtylc

    specialtylc LawnSite Bronze Member
    Posts: 1,656

    After 3 years of growing your business as you say, you shouldnt need any money from the silent partner. The business should be self supporting
    and able to buy what ever equipment that is needed.
     
  9. mbella

    mbella LawnSite Bronze Member
    Posts: 1,284

    What do you stand to gain from his investment?
     
  10. gammon landscaping

    gammon landscaping LawnSite Senior Member
    Posts: 550

    go to a bank 6-8% on the money you barow is cheaper than 25-50% of the money you profit
     

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