Question

Topic: Other

My Idea...her Labour...partner Or Not?

Posted by Anonymous on 1/23/2009 at 11:15 PM ET 125 Points
I recently came up with a un-touched biz idea (for nz) with abit of a blueprint of how it would run- took it to a friend of mine who is now involved with her husband. Strengths are: she is the "hands on-or labourer if you like", he has the marketing and business degree (he puts all the time managment and contracts in play for us) and I design the image, source and research diff. avenues of marketing also, and have connections of higher level status than all of us combined. There is nothing legally put into play yet.We have agreed that our 1st event, the profits will be split 50/50, however my obvious fear is that - what if after sometime, one half of this party starts to drag their /my weight?
Please help in suggesting the best way for percentages/commisions/salaries ect.Partnership or not.
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  • Posted by wnelson on 1/23/2009 at 11:50 PM Accepted
    You answer your own question, really. There is nothing legally put into play yet. 50/50 partners are the WORST because no one is in charge and no one can make a decision for the company. And in your case, you are 33-33-33 split 50/50. Two of the three partners are legal partners through marriage. So your 50% is less than their 50%.

    Given this scenario, I would advise you, as I would any business I work with, to draft a legal agreement spelling out how the work and profit are split. Not only that, but how decisions within the corporation are made and how the corporation is to be dissolved should that occurrence come about. While you are all friends now, later on, that may not be the case and if the company continues for longer than a generation, the next generation should have the guidance of the founders to govern their behavior. As you suspect from the tone of your question, it is best at this point, to organize legally. And the agreement should include one party in charge for the best of the company - someone (or someones) has to have 51% so company decisions can be made in the event of a disagreement. If the 49% partner(s) don't agree - then you have no partnership, really.

    I hope this helps.

    Wayde
  • Posted by Jay Hamilton-Roth on 1/25/2009 at 7:34 AM Accepted
    Instead of partnering - why not simply hire them (or outsource to others)?
  • Posted by mgoodman on 1/26/2009 at 8:14 PM Moderator
    FWIW, I think 50/50 partnerships are best. It forces the two equal partners to work out any differences, and to negotiate without one of them "pulling rank."

    For many years I worked with a partner (50/50) and we were able to make the arrangement not just work, but work to our advantage with clients. We would show clients how two experts can disagree, and we'd invite the clients to get involved with us and help us all reach the best solution. We even went so far as to present our points of view by taking the other partner's position, so we made it a genuine debate between ideas, not personalities.

    I discuss this approach in some detail in Rasputin For Hire. The subtitle is An inside look at management consulting between jobs or as a second career. I recommend that all partners read that discussion and digest the concept, because I think unequal relationships are far more likely to self-destruct over time.
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