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Hi all.
We killed our mortgage and now have most of our paychecks saved.
I am getting close to the age, when driving one hour to work and dealing with 12 bosses is not the best healthy solution.
We, as a family, would like to invest into something that will allow us to cut work hours short, maybe go part time and supplement on the side.
Lo and behold, here's phone call from my neighbor. Great guy, excellent car painter. Swamped with jobs. Wants to open legit business, full blown body shop with paint booth.
Short on funds.
We, on other hand, in matter of several more months will have plenty and not really somewhere to stick them in right.
I already told him couple months ago, that I'd "sponsor" and partner with him. He let it go, but now is back and wants to re-discuss that offer.
I am in need of general recommendation, how such things are done. He's the labor, I am the financier. I guess, it will all end in contract attorney hands one way or another, but, at least for now, I need general insight on how such business ventures are set, and what kind of profit sharing is expected? As he might, as well, say it does not fit his bill, and try to lift it up on his own.
What I am most curious in, what is customary profit splitting in such situations? And I am not talking 2-3 big ones, painting booth itself is $20K. So that I can at least toss some meaningful scenarios at him.
I dont know what the exact percentages are but I will say most end badly.
I have owned several businesses and have tried the partner thing twice, both times it did not work out. I now own a successful business by myself and i dont have to ask anyone else when making decisions.
What if you partner with him and find out he is a slacker, or mayber he is not a slacker but is not good with finances or not good dealing with customers or does things that you may not like.
Too many issues, its like a marriage, really! The divorce will be ugly, believe me!
Come up with your own business and put 110% in to it and you and only you will reap the rewards !!
Your looking for opinions so i will give one=
DO NOT PARTNER WITH ANYONE
I dont know what the exact percentages are but I will say most end badly.
Have "blood in the building" is the best aphorism I've heard.
That's the secret of those family operations.
Beyond these is to be VERY clear about the distinction of having an actual business
vs buying yourself a job.
More directly, as negatives about the current job are your main complaint, I'll say to focus
instead on finding a way to change that for however many years you have until retirement.
Even if it means less salary... save the aggravation.
Turn a hobby into a way to make a nice lump of cash now and then.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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I have many stories of failed partnerships, including a relative absentee owner whose partner stole the profits and ran the place into the ground. Even as the silent partner financing it, if you know nothing about that particular business you will have a hard time trying to oversee, audit and make sensible decisions. If his work is good and he keeps busy, you will work more than 40 hours a week doing the books, paying bills, collections, taxes and so on.
Acknowledged, Hemlock.
I do know his job quite well. We happen to be of the same dissent, and my wife and his family are from the same region in old country.
He's bad ESL, I am not. I have been running practice as practice manager for 8 years by now. Matter of fact, it truly looks like we can complement each other in what each one of us is missing, or not willing to do. He is very sought for in the area car painter. I do not want to sniff solvents, but have what he lacks - funds. And people skill in language he's limping in.
My plan was to giddy up him this year just with $$, then cut it loose at my main job and go part time, at schedule convenient for me, or, maybe, even take on only per patient basis, as experience I have can not be substituted by kids they hired. And dedicate more time to his business. Slowly ween away from my main job. It's nerve wrecking, and I want to die healthy.
With all this said, I DO UNDERSTAND what partnerships end up in and can tell stories myself. And we are disucssing all this strictly HYPOTHETICALLY.
I just want to know, what is usual and customary sharing set up. That's what I am asking for. I know, my goal would have been to get my investment out asap, and make some on it. That's a no brainer. But otherwise?
With all this said, I DO UNDERSTAND what partnerships end up in and can tell stories myself.
And we are disucssing all this strictly HYPOTHETICALLY.
I just want to know, what is usual and customary sharing set up.
That's what I am asking for.
An exit plan that is fair and equitable. Like a pre-nuptual agreement for a marriage everyone
needs to go in to the deal "with their eyes open". No one harboring secrets, contrary alliances or
any other motivation... nothing aside from seeing the new enterprise succeed.
Beyond that it's about the day to day operational aspects...
The money of course is the big one: How much money is coming in as investment, by each by others in total... if something other than money is coming in (disproportionately) how that is valued vs cash, how much of the actual cash is held in reserve, at what point it stops being theirs or mine and becomes "company funds"... what it gets used for the who has authority to spend...
Of course. It's ABC of such things. I just need to know, what number to toss at him. He's, as of now, out of his regular job, as he is so backed up by private orders. Wife is not working, due to baby born last fall.. His entire $$ went into house they bought 7 mths ago, and all the cars he flips in his property, tools, paints, and such. I already loaned him a not so small but no so large amount.
But if we go hand in hand into picking him up, all $$ will be mine, basically, he'll be the "do it physically" guy. And like I said - it's no ten grand. More than that. Lease, rent, licenses, advertisement, office equipment, and such...No doubt more tools..
yes, i would say 50/50 when both partners are putting in the same hrs. with your arrangement you would have to be clear about who is doing what and who gets paid what.
And you say he already owes you money? Not starting out good already.
Believe me when he is there every day pumping out paint jobs and you are not there or only there part time, he will at some point forget about all the upfront money you put up and resent the fact that you are not also sweating with him.
I dont claim to know everything, just giving it to you from someone who has been in these positions before.
It could work, but it would be the exception not the rule.
Sounds like you have the cash, why would you want to even consider a partnership? I only did it in the beginning because I did not have the cash by myself.
If you must do it then i would say to offer him alot less than 50%. Say 10% and he could work his way up over time giving him more ownership as the place becomes profitable and you get your investment back.
It doesnt sound as if he has alot of other offers on the table.
If it doesnt work out you can find another body guy for $15-$25 hr and keep rolling
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