Creative partnership arrangements?

[Stagecraft]

I've been working as a signwriter, designer and fabricator for over 25 years.
Changes within our industry have pushed me to leave the union umbrella and to open my own business and work as a contractor to my former union.
Business will likely be relatively slow to start although I'm certain we'll get by just fine for the first six months due to some agreements in place.
I'm smart enough to know that I won't be able to handle the business alone and I'm leaning towards bringing a partner on board. The person I have in mind is well liked and respected within our industry and has a great work ethic and personality.
I already have all the equipment we would likely ever need, and the person I have in mind has almost nothing.
Being a brand new self-funded business I can't afford to hire and pay a qualified employee so I'm looking at options for attracting someone to join in as a limited partner on a trial basis.
I'm quite willing to take almost nothing home until we're up and running but I don't know how I can ask that of somebody else.
I guess what I'm looking for is creative partnership structures as I haven't been able to find a comparable business model so far.

 

[James Burke]

If I were you, I would take him on as independent contractor "employee" (at will)...no contracts, no promises...nothing. You're going to have enough challenges without throwing in partnership issues this early in the game. If possible, take a "wait and see" approach before making a commitment that might come back to bite you. You could establish some benchmark incentives (based on how the business does) along the way to make it more attractive to him.

If you really feel you need the partnership to make a go of it, make sure you have an attorney "dot the i's and cross the t's" beforehand. With a partner, how you will intend to "get out" of business is much more important than how you "get in".

Finally...no handshakes, no "gentleman's agreements", or anything without written and signed (and notorized) documents....even if it means taking a few months before you startup.

And on top of all that, make sure you have a solid business plan in place to keep you from getting distracted.

JB

 

[allamericantrade]

A partnership is worse than a marriage. I tried due to similar circumstance starting with 2 other partners. The first partner did not work out immediatly and was voted out by me and the remaining partner after two weeks. The remaining partner was a close friend of mine since 4th grade. we were like brothers. I put 100% of my time, effort, and every dime I had into it. after a month He did not put into the business a quarter of what I did and I had no money nor credit. He had both but was willing to part with neither. I told him I would prefer he worked for me and he didn't seem interested in being an owner. He got upset at this and left. Since that day he doesent speak nor return a call. It was a long brutal start with many late nights and early starts but now I have a business I am proud of. I built it and own it outright without the drama. If I want to go in a direction with the business I am free to do so at a moments notice and not have to worry about some partner who doesent see it the way I do.

 

[James Burke]

If I want to go in a direction with the business I am free to do so at a moments notice and not have to worry about some partner who doesent see it the way I do.

Priceless!

 

[OldPaint]

partnerships are like a marriage, you both go into to with one thing in mind, and then when thats exhausted ...........you both have EXPECTATIONS of selfish desires. i have another sign painter, who he and i have worked together since 1998, and are still doing so and are the best of friends. why? because neither of us take advantage of each other. we do jobs, he finds em, we sit down and lay em out together, if its a paint only, i do patterns for him, if its vinyl only, he still handles the client and i do the work, which i get paid for from him.
we have NO AGREEMENTS, CONTRACTS or signed commitment to each other. it can work for both of you if your of both like minds.

 

[tsgstl]

The word partner is like cryptonite to me but I have seen many very successful ones work very well. Most of the ones I see work well are the ones that do not work side by side. I think if you can't find one of those or you can't somehow find funding for what you "have to have" then you need to rethink your timing. I will also tell you that the ones who told me I couldn't or shouldn't were the ones who motivated me the most.

You have been in the business long enough to have the knowledge to create a detailed correct business plan. Take advantage of this!!

 

[WildWestDesigns]

partnerships are like a marriage, you both go into to with one thing in mind, and then when thats exhausted ...........you both have EXPECTATIONS of selfish desires. i have another sign painter, who he and i have worked together since 1998, and are still doing so and are the best of friends. why? because neither of us take advantage of each other. we do jobs, he finds em, we sit down and lay em out together, if its a paint only, i do patterns for him, if its vinyl only, he still handles the client and i do the work, which i get paid for from him.
we have NO AGREEMENTS, CONTRACTS or signed commitment to each other. it can work for both of you if your of both like minds.

That is key and unfortunately not easily found even if it initially looks like it has been.

In this day and age especially, I would not enter into a partnership without a contract. I wouldn't enter into one without a contract at any point in my life, but due to my dad I was bent that way from the get go.

I know far to many examples were a partnership did not work out. One just happened last year when an IT friend of mine started his own repair shop after he lost his job with a computer company. Went into it with a partner and that lasted all of (drum roll please) 4 months before they were going after each other. This were people that were supposedly friends.

It is far better, in my opinion, to have everything spelled out. What's expected in every situation that you can conceive of. Those typically last the longest. I would also look into doing an LLP if the jurisdiction that you are in allows for it and it's feasible for y'all to do so.

 

[visual800]

I dont care what contracts, what agreements what parameters are set DO NOT DO IT. Its doomed to fail from the start. Ive seen to many start and them all set to fail and along with it goes a relationship. you dont need a damn partner to do business

 

[Craig Sjoquist]

Just get to work and do everything till you can afford a 2nd person.

 

[WildWestDesigns]

I dont care what contracts, what agreements what parameters are set DO NOT DO IT. Its doomed to fail from the start. Ive seen to many start and them all set to fail and along with it goes a relationship. you dont need a damn partner to do business

That may or may not be true. It depends on the partnership. Some partners just bring in the money, the other does everything else. Some do production, some do sales. It depends on the strentghs of the person.

I can understand a partnership arrangement with the first example, where you have some bringing in the money. However, without a contract they might try to overstep what you had envisioned their roles to be.

Of course, you look at lawyers and acountants, most businesses in those two fields are organized around partnerships.

So saying that they are doomed to fail is a little much. Statistically I would agree with, but not in such absolute terms.

 

[signage]

Of course, you look at lawyers and acountants, most businesses in those two fields are organized around partnerships.

So saying that they are doomed to fail is a little much. Statistically I would agree with, but not in such absolute terms.

This is true for most profession's!

 

[SD&F]

I think that some partnerships do well if you both have the same goal to build and be succesful. The key is that he has to work hard if not harder than you. If you do an agreement you could offer him a small percentage with stipulations built in that he will only receive it after....say 2-3 years if he is profitable to the company. If he leaves or doesn't work out, he receives nothing. I am in a partnership and although we are both very different, we share the goal of doing great business and growing. We have made it through and not always agreed, but placed the business first.

 

[Gino]

Let’s back up a little.

• You’ve got all the equipment.
• You’ve got jobs booked out for at least 6 months.
• You can do all of this yourself…. almost.
• You’re the one who has everything at stake.

Now, you want to bring in someone that.....

• Evidently isn’t working.
• Has no equipment.
• Has no jobs.
• Has nothing invested at all.
• You want to make him an equal or near equal partner and he/she has nothing to offer except out of work and well liked.

I don’t think partnership is the right word. Pay them as a sub-contractor or hire them part-time and pay them accordingly. You can’t buy good partners. If you pay anyone enough, the will be your partner, but that doesn’t mean they’ll hold up their end of the bargain, should something better comes along.

Oh yeah, I’m making $700 a week being a partner, but I can make $700 a week working for Joe Schmoe over here and not have 50% of the debt should he fold. See ya……..​

 

[Stagecraft]

Thanks to all that took the time to reply!
I suppose "partnership" may have been the wrong choice of word to use when I posted the question.
Seeing as though the shop cashflow will be extremely tight for a while, I'm looking at ways of attracting somebody that is worth having onboard without having the financial resources to pay them as much as they may be worth. This is why offering some form of partnership seemed a possible answer, if not that, then possibly some sort of profit sharing.
In the end, the person that was my first choice was genuinely interested but wasn't able to commit as their financial standing wouldn't allow for a reduced income. We've left the door open should circumstances change down the road and we're still on very good terms.
As to why I don't just do it all on my own...
We'll be essentially a service business catering to graphics and cnc projects designed by others. Turnaround time is everything in our industry and lead times are often measured in days if not hours. My fear is getting too much business and not being able to keep pace; not a big problem when cashflow is good and if I have somebody on-call that can jump in and help at a moment's notice.
Still thinking this whole thing through, and thanks again for all the input. - Boyd

 

[4R Graphics]

You are worried about getting to much work?

That is the one problem every business owners wants to have.

If you have to much work coming in then (if you have done things right) you should have money coming in you can hire grunts to help with some of the load until you find someone with the skills to really be an asset. Once you find the asset let the minimum wage grunts go and get more work, hire grunts, find asset.

Rinse and repeat.

 

[Stagecraft]

bearwen, we're in a rather unique situation. We're operating within the confines of a union, our clients are contracted to the union, I have to hire from the union membership which can be...ummm...ah...challenging at times.
Also as I said in a previous post, in our industry turnaround time is paramount; added to that is the fact that we often ride a real rollercoaster; either not busy enough or we're buried in work. When there's a lot of work coming in, it also means the more experienced and reliable union members may already be out on other projects leaving us with people that may not have the necessary skill sets for what we do.
Believe me, if there were a simple or elegant solution to these issues, I wouldn't have had to post the question on this forum.
I just thought that somebody here may have been in similar circumstances, needing to attract the right personnel when money is tight.