So true. Started a business with a real good friend. All legit, had a lawyer draw up inc. papers. The first few months were fine, then the guy did less and less. He sat around doing crosswords all day, listening to Limbaugh and had a constant negative vibe. I would work the phone for sales and would hear him carry on that I was wasting my time and no one is going to give us work.
After a couple years of this I had enough and got out.
Long story short, ended up getting screwed out of 15 G's and, of course, no more friend. Be careful picking your partner.
I'm sure there are a ton of horror stories out there but one thing people don't do is ask. Ask them to get off their *** and do something, ask them to pull their own weight.
At some point I learned that if you ask someone to do something the likely hood of them doing that goes up exponentially. Sure people can be ***** but you also have to be vocal about what you expect or it will end up blowing up later on.
Nice to read some of this. We had two different friends join in as partners at different points in our business. Both lasted a couple months before bailing out. Both wanted all of thier investment money back, and we gave it to them even though that put us in BIG financial bind. But that is what happens when you have "Friends" join in with you.
I recommend making a go with as few partners as possible. If taking on a partner, YOU CANNOT STRESS ENOUGH how much hard work and dedication is needed to make a private business successful. Both or our past partners were not prepared or willing to put in the work. Many people out there that want to jump in with someone on thier business are just looking for a side income. They don't share the same passion you do often times. They will always look for ways out when the going gets tough. If you find that rare gem that shares your same dreams and hopes for the business and wants to pour themselves into making it happen, that is the one to hold onto. Those are hard to come by in my experience.
{"I'm sure there are a ton of horror stories out there but one thing people don't do is ask. Ask them to get off their *** and do something, ask them to pull their own weight."}
Hi Jon
No offense, but this sounds a little naive. As you know, a good partner hopefully will strengthen areas you may be weak. My partnership was a 50/50 split. My partner was my equal not my subordinate. You ask or delegate to employees. I didn't ask my partner, I gave him an ultimatum (twice) if he wanted to stay in business with me. I think the big thing to remember is that people change. We all change. Somewhere down the line, he lost his desire for the business.
It didn't happen overnight, it was a long, exhausting, costly experience.
Anyway, that's my 2 cents. I truly hope you have a better experience.
{"I'm sure there are a ton of horror stories out there but one thing people don't do is ask. Ask them to get off their *** and do something, ask them to pull their own weight."}
Hi Jon
No offense, but this sounds a little naive. As you know, a good partner hopefully will strengthen areas you may be weak. My partnership was a 50/50 split. My partner was my equal not my subordinate. You ask or delegate to employees. I didn't ask my partner, I gave him an ultimatum (twice) if he wanted to stay in business with me. I think the big thing to remember is that people change. We all change. Somewhere down the line, he lost his desire for the business.
It didn't happen overnight, it was a long, exhausting, costly experience.
Anyway, that's my 2 cents. I truly hope you have a better experience.
So many times people can be passive aggressive, and the other party really doesn't know they are doing anything wrong. If you're vocal about your expectations and they aren't delivering you can solve problems early on instead of dragging it out.
50/50 partnerships hardly ever last so why start with one? One side needs to have the final say.
I think 50/50 partnerships are great when each person runs a different aspect of the company. My partnership wouldn't work if my partners told me how the art is supposed to be.
I am the creative director and make all the decisions for how the product looks, websites, advertising. My partner does the marketing, gets sponsorship, does the wholesaling.
We talk about a lot of what we do but for the most part we let each other do what they do best.
Several years ago I went into business with a coworker who was a good friend at the time and an excellent sales person. We both put in a ton of work, but he had an unknown desire to spend a lot of money unneccessarily. This pattern eventually got out of hand, so I left the company. Very soon after I left the company I discovered that he had purchased laptops, a $10k phone system, and applied for some credit cards using my credit information. Eventually he plead guilty of identity theif and I ended up coming out of pocket approximately $25,000.
Just last year my sister got me interested in screen printing and starting a clothing line. I took that idea and ran with it. I did everything to see the dream come to life, and the rest of the family wanted in on this venture. Unfortunately I agreed. I came up with all the design ideas, contracted several designers, got us into tradeshows, built the website, SELL, setup the booth, and everything else you can imagine along with investing the most money. My "Partners" put in little work, yet wanted to collect their portion of the money we made even though I never saw a cent. I seperated ways leaving thousands in inventory with them. Recently I recreated and updated the website to try and sell some of the inventory that was left, but guess who had their hands out when they discovered it was online again. "Click"....website deleted.
I'm done with partners. I'm doing my own line now. I'm moving slowly, but the good thing is that I am growing. It's much less stressful. I use to think partners helped to fill in the gap, but I think they only helped widen it.
My advice to you is to do what you do best, and outsource the rest. These days you can hire anyone to fill in those gaps very inexpensively.
In my opinion and experience, I would stay far away form any partnership / LLC with a 50/50 ownership.
I have been down the road of a 50 /50 and here is some free advise.
I like to think of it this way
A company is a ship. A ship needs a captain.
One Captain.
You need to remind yourself that unlike most businesses, This type of business (T-shirts & apparel) can be started with little start up money and done in your spare time while you work your primary job. There is no need to go into business with someone else if you can help it. The beauty of the business is that one person can grow a hobby into a business entity that they can enjoy creating.
The partnership I was involved in was a restaurant so you can imagine the headaches that came up as time went by. This business doesn't have those major headaches so enjoy it for it's simplicity.
I have seen numerous friendships ruined by these arrangements and when the money gets tight and hard decisions need to be made the negative side of our human nature comes out and walls go up.
It is exciting to sit around thinking about how your business will grow and your product line will expand and the feedback from friends and potential business partners is always great but when it comes down to the bottom line and decisions need to be made it comes down to ONE.
Some of the potential problems won't surface for months. Wives or husbands of the 50 / 50 partner show up and then they think they have some say in business decisions.
Responsibilities of all involved aren't clearly documented in stone so there is always a gray area.
One partner may have children at home and they are the first priority. This doesn't seem like much but when it comes to putting time into the business you may find yourself working twice as much while your partner is running to baseball games.
You will never think of all the potential problems but they will surface down the road.
Having people working with you is great and there are some companies that are well oiled machines. I just don't have much faith in any 50/50 entity and have seen them crash and burn with friendships lost.
Most business courses will go over this in detail and when you sit down with the attorney to incorporate and tell him you want a 50/50 just look at his expression. Most good attorney's will try to talk you out of it.
I would only get involved with others if they understood that the company was mine with no partnership at all. You can set up a profit sharing system for the people working with you and there are several ways to do this.
From the movie Highlander.
"There can be only one"
Ed
Last edited by Austin300; May 25th, 2009 at 07:15 AM.
Re: How to choose the right business partners 
