Dividing a Business 50/50 Any Suggestions?

[Funky Monkey]

Hi all. Friend of mine and I are considering (down the road) turning our hobby into a business. Yesterday when we spoke, she asked me to come up with what I thought would be 50/50. We would make (possible list as it is down the road a bit) bath salts, lotions, bath gels, room mist, carpet fresh, lip balm, salt & sugar scrubs, bath bombs and bar soap. At least these are on my "fun to do" list. I know from the get-go that she will not be able to make the soap at her house, nor the lotions or gels. My question is this, if I do a majority of the product stuff myself, what is left for her to do? I know she can do the packaging, advertising and possibly even the accounting. We will both be caring for the website (her husband and I are both professional web designers.) I know I am missing a HUGE part of a B&B business. Any suggestions on some other major parts that she could do? I certainly appreciate the input.

FM

[debscent]

On a clearly business perspective, it doesn't seem like a 50/50 partnership. What is she looking for -- 50% of profits or 50% ownership? Is she willing to provide 50% of the start up costs? What are your friend's strong points, is it finances, the ability to sell, etc.? You both should find out your weak points & strong points and see if combined you would make a good team. I'm sure I'm going to get jumped on for this next statement, but more times than not, friendship & business don't mix. I wish you the best of luck on your adventure!!!

[Scent Cellar]

I can tell from your post that you are already thinking you are going to be making most of the product. But there is alot more to business than the product making .. advertising, shows, designing labels etc that she could be involved in. I agree that friends don't make the best business partners, if fact I think it is the best way to ruin a friendship.

[heirloomoriginals]

I agree with Jan, it isn't always a good idea to go into business witha friend. My dh did it 3 years ago with his good friend and their friendship hasn't been the same since. They went into horse hauling (friend found the lady who they contracted out to) and they didn't get paid for 2 trips and we lost so much money it isn't even funny. We were down to our last pennies and even had to borrow from both sets of parents. Thankfully, dh and his friend were able to get their old jobs back and we are doing fine now (so fine that I am starting my own busines in the very near future.

Just really think it through!!

Steph

[andrealh1975]

I agree that friendship and business don't mix. But, if this is something you decide to go through with, just make sure you both are on the same page. Make sure you put everything in writing.

[dcroome2005]

I tried that a while ago and got screwed from my partner. Now we are no longer friends. It just sucks all around! I finally got rid of her :-) Thank god I was the first to start the biz so I just booted her.

[Luci]

The thought of a business partner scares me to death these days. I was recently approached by a "friend" that owes me several thousand $$ saying she wanted to discuss a business proposition with me. Needless to say, I'm not in any mood to discuss anything with someone who has made NO effort to pay me back what I'm already owed.

Be Careful!!

[Funky Monkey]

I agree that it can be rough on a friendship. No argument there!

Yes, I will be making most of the product. She is coming up with the label designs and packaging. What I'm trying to figure out is what else is there for her to do? Advertising, packaging, design. We will be signing a partnership agreement and want to have responsibilities layed out so we know who is doing what. I could very well do it all on my own (already have one successful company) but she really wants to be a part of it and I could certainly use the financial help as well. There are two products that she CAN do at her home.

So I guess what I'm asking is.. what else do you guys have to do besides what has already been mentioned? task wise? (advertising, packaging, design) I know it's not exactly clear what I'm asking, I'm sorry, I'm trying to phrase it the best way I know how. Thanks again.

[dcroome2005]

Who is gonna do the book keeping? Who will be taking the time to order supplies? Do you guys live close to each other?

[cindym]

I have only one piece of advice, do not go into business with friends. When I first started my business it was amazing how many of my friends wanted in on it. I said sure, you can buy from me wholesale and sell what ever you want. That went over like a lead ballon. Friends and business do not mix.

[sockmonkey]

What are your plans for the future? Do you intend to always be an internet only business? Do you plan to sell wholesale to other stores; do you want to do craft shows or home parties? You need to consider what your market base will be for the products you are dreaming up in your head. If you just want to be an internet business, I see no benefit in having her join you, unless she will be supplying you with cash to buy inventory. There are many, many b&b websites already, so I would think (based on may stories here) if you are serious about making money at b&b, you might need an alternate source to sell your products beside the website--unless you have created an absolutely fantastic website and have killer products, PLUS you know how to market them on the internet so you get noticed.

Speaking of products, couldn't your friend join you in your home to manufacture products, if for some reason she can't make them in her own home? That way, she will be sharing some of the labor burden.

There is more than just physical labor involved in running a manufacturing business. Some people are more geared toward the physical aspect (actually making the product), or the creative aspect (dreaming up concoctions, creating artwork), and others are better suited toward the "yucky" tasks--financial, research, and selling/PR. Perhaps the "yucky" tasks are what your friend might be good at.

Just because she might not be handmaking b&b products does not mean she cannot make a valuable contribution to the company. Good research for information on ingredients, supplies, recipes, vendors, trade and/or craft show locations, pricing, laws, etc., can take up a very substantial amount of time. Shipping and packaging can also be very time consuming.

I guess you need ask yourself what you hope to gain by having her join you.

[LindaColo]

Just a thought: Could she sell your product on consignment instead of being a partner? It's hard to develop new products when your partner is dragging her feet and is reluctant to spend the money.

I am in a partnership with my BIL and while it's nice having the help, sometimes it feels like a push-me-pull-me direction. He is good in sales, but hates spending money changing the line and such. The business is at a standstill because we have different views on what to do. There are times when he is right, its just that he has enough on his plate and doesn't want to spend his time on this business. However, its hard to change when both parties don't agree.

[Funky Monkey]

Well, we plan on doing craft fairs and maybe get some in the small shops in our town (very small town.) Of course the internet would be an avenue, but I don't expect much out of that, it would be more of an informational thing. Yes, she could join me here to do stuff, and I will talk to her about exactly what she wants to do to contribute. I hear the warnings about being friends in business, and will consider that as well. You guys have given me much to think about. THanks for the advice. I'll update ya when I get my thoughts straight.

[LynnS]

Nio way for me Funkey Monkey.First you don't know how it will go.Busy or not.Then you don't know what all she will put into it.So you sign for a business deal together and BOOM she is not available or no time.My friend did this once for a produce business.She got burned real bad.She has money so it wasn't bad but she said NEVER EVER again.Now she buys property and fixes it up herself and makes lots and lots of money.

I am not busy in my candle business but if I ever do, it will be HELP I will hire and NO business partner.

LynnS

[Late Night]

Everyone else has given the advise I would give too. One thing I would do is make sure you keep all the products at your house in case she bails on you. At least you won't lose your ingredients. Please don't take this the wrong way but she doesn't seem as motivated as you are and it sounds like she is looking for someone to carry her along. 50/50 may mean she buys all the ingredients and you make the end product. You print all the labels and she buys the ink. You pool your money and buy the containers. Be prepared to do her part of the job if she just doesn't do it. If you get a web site, who will own the name? If you get it copywrited, who will own that? If she decides to quit can she sell out to someone you may not like? Just get EVERYTHING in writing! Going in business with family and friends is usually ends in a disaster. Whatever you decide, I wish you the best of luck.

[BubbleBath]

I'm not going to say your friend isn't as motivated or as eager as you are because I don't know the reason why she cannot make some of the products. One of my best friend's husband is in a partnership with a good friend and both the business and friendship are going strong after 7 years. The secret is one partner has agreed that he doesn't know as much about the business and often defers to my friend's husband. He was there in the beginning financially and often helps out (physically) when things are tight (in other words a silent partner). I think if this is the type of partnership you are looking for, it may work out. Best of Luck!

[LynnS]

Cindym

Oh yes so true. I see what you mean.A friend sees you are doing good or sees you have started a good thing and want in on the ground floor.You say they can help the business and themselves by buying wholesale and re-selling they aren't interested.So that shows how they would be as a partner and a split(50/50).NO way as I mentioned before.My husband is my partner and has been for 38 years so if I need HELP I will go to him.

I have seen people I know like my candles and first thing they ask "where do you get supplies and how do you make them" .So they are wanting in it for themselves.

LynnS

[Everito Bandito]

Partnerships can make for an ok umbrella. They seldom make for a good roof.

[wookie130]

Yes, I would strongly consider going into the business for yourself, and for yourself alone...friends are not worth losing over a business arrangement. If she wants to learn the trade (from the making-end of things) for herself, and go into it alone, then that's great...but this way, you can be at least your own boss, and not worry about straining your relationships with others.

[KristinesShower]

This is from experience as I had a partner a couple years ago (49/51%) - the 51% was MINE.

If you want to do this, the first thing you need to do is get yourself to a lawyer, sit down and decide how you want things to go when you break it off with each other. I know this sounds a little weird, but believe me - you will be glad you did it while everything was hearts & flowers between you two.

I'm not saying it won't work, but at least you will have something in place if it doesn't. Whatever you do, don't give her as much power as you either. 49/51% is fine and if she doesn't like it, I would tell her to ease on down the road.

By the way, my partner? A part of my actual FAMILY and I am still paying for it 2 years later. Needless to say I was $35,000.00 in debt when she left, I am slowly crawling out from under the piles of things leftover from our partnership.

Don't lose your vision either - what I mean is, don't let her talk you into doing this and that because it "sounds" good. Trust your gut and stay on course. Alot of things "sound" fun and great, but when it comes down to it, things like that usually end up costing a fortune & half the time won't work.

I'm sorry if I sound a little anti-partnership, but I must say "been there, done that"

[Candybee]

This is from experience as I had a partner a couple years ago (49/51%) - the 51% was MINE.

If you want to do this, the first thing you need to do is get yourself to a lawyer, sit down and decide how you want things to go when you break it off with each other. I know this sounds a little weird, but believe me - you will be glad you did it while everything was hearts & flowers between you two.

Bingo!!! The single most important tidbit of advice I have seen so far! There is something about starting at the 'back' before you move forward. If your partner is as serious as you - they will have no problem with setting up a business proposition with an attorney. Put it in writing and make it a legal document so you both know your responsibilities. Doesn't mean you can't be flexible or have it 'written in stone' but it will help down the road if your business partnership doesn't work.

Now that I have said that-- I sure do wish sometimes that I had help with my biz. I get pretty lonely sometimes making all the decisions. But when I do I know they are my own.

Anyway-- I really wish you luck with your decision to partner or not to partner.

[lsbennis]

Yikes...unless you are both on the same page and everything is in writting, I would suggest a contract with all the details on who does what and how you will both be compensated. Is there enough work for her to validate giving up half of your business, will bringing her on create more business or just drain away from what you have now? Can you take her on in a limited capacity and see how it goes...if having her creates more business then you can reconsider a full partnership? I took a partner on in my Real Estate business and it was a disaster...was giving up half my commisson and still doing all the work.:embarasse Anyway good luck a with whatever way you choose to go.

[Noodle]

I have been successfully in a business with one of my best friends for a couple of years now. It used to be me and I could not do it any more alone. It makes no difference which one is making the products as long as everything is consistent and that both parties are pretty much evenly divided work wise. My friend and I switch jobs every 6 months so that we do not get burned. It also stops boredom. When you are in a business together it means that ALL expenses are shared. Your website, supplies, advertising, etc.. EVERYTHING! All of your profits are shared. You must understand one another very well and be able to tolerate personality issues. These issues somehow only show up when two friends become business partners. You have to figure out early who is better at what. One might be more creative. One might be more business oriented. One may have a better overall big picture. You have to learn this and accept it if your friend is better at something than you are. I know that my friend can sell ice cubes to an Eskimo. I am weak in this area. I also know that my creativity and pulse with what people want is a strong point with me and weak with her. Know what I mean? Lastly, you had better get things off of your chest early if they are bothering you. If you let tensions build, you will lose a great friendship. GOOD LUCK!

[KristinesShower]

Did you decide to go through with it? I was searching for something and found this post. How are you doing Funky?

[Luci]

Tired of your friend and want to get rid of her?? Lend money and then ask for it back after a ridiculous long time.