To partner or NOT to partner...that is the question

[Jane42]

If you are already comfortable with your setup, and can financially get where you want to go by yourself, I suggest you follow your instinct and do as you have been doing.

We started our business as a partnership so we have been able to share the expenses, learn from each other, etc. but if I had done all that myself, I think it would be very hard to take someone on at this point. The first two years were the hardest! I don't see where we would benefit by taking someone else on at this point.

As far as her making candles and selling them.....my partner and I BOTH have to approve of the testing of each of our candles before we will sell them. We have very strict guidelines on how our tester candles burn before we consider them "good" to sell. If one of us gets lazy and says "well, the vanilla just had a "touch" of soot on the jar - I think that will be ok", the other one says "NO WAY...retest with a lower wick or less FO". We help keep each other in check when the frustration sets in....lol This goes for any of the products we sell. I can't tell you how many times my partner (bless her soul!) has to listen to my reasoning for why I don't feel comfortable selling something....it may be picky, but she understands that we both have to feel comfortable when we sell something with OUR business name on it.

Go with your instinct!

[candlenose]

been there, done that...no,no and.......................no

[pixxidusted]

I'm jldorrington's business partner. Yes, I definately feel the same way. I think we have a good thing going for us, mainly because we weren't best friends before we became business partners. I don't think it would have worked out nearly as well if we were any closer. It is a tough decision to make...especially with your "best" friend. IMO if you were afraid to tell her that you were uncomfortable with the idea of going into business with her, imagine how it would be if you were working together. Sometimes you need to be brutally honest if you don't like the way someone is handling business, especially if it is your business on the line. Maybe an option would be for her to make B&B and you make candles, but not in the same business. You could have fun working on things together, and not have that commitment. You could bring each other customers and even sell each others product, be it wholesaling or whatever. That way you both have total control over how you run your own business, but can share it with your friend. Just an idea!

I just think that if your initial reaction was, "no", then there was a legitimate(sp?) reason for it.

Good Luck!

[Nanasnecessities]

I wouldn't do it.

I sold a wholesale part of my business last year. He hired somebody to run it. I tried to stay out of it, but it drove me crazy.

I hire people to work for me, just recently I hired a good friend, it is working out, but then we are not partners. She still is my friend and unlike my other workers she can do more than turn on a computer

I can't imagine having a partner in my scent business. To many decisions to make for two people. plus way to many chances on them leaving and starting a business against you.

[Tahlula B.]

Last year I had someone approach me to partner my business. She had a lot of capital so I considered it. We even started the process. We hit a glitch and I was so happy. I was starting to regret saying yes, let's investigate and wasn't sure how to tell her when we hit the glitch.

The thing I realized during this time is that a parnership is much like a marriage. I wouldn't enter into a marriage lightly. I simply cannot do it. I certainly wouldn't do it with a friend. My oldest friend opened a shop with three other friends a year ago and it took all of 30 days for it to go sour. They weren't close friends and now they are not friends at all.

Consider things very, very carefully. I am not saying don't do it - what I am saying is realize exactly what type of relationship a partnership is before jumping. Go with your gut and if you do this use contracts, lawyers and create an exit plan from the START. Nothing ruins a friendship like a partnership gone bad.

[Jane42]

Does anyone here have a "generic" partnership plan - something that people that are considering going into business with someone else could look at?

I know there is alot more to it than I know. And who would think of having an "exit plan" in case things don't work out....but I can see where that would be extremely important.

What if one person wants to continue the business....does the other walk away with nothing? There is alot of time and money invested in starting a business...how would you decide to split it?

Lots of questions that I have no answers to......

[cestlavielumiere]

IF you go to Bplans.com and legalzoom.com you can find detailed information on setting up agreements. Your local small business association can help also. I am currently in the process of drawing one up. I would be glad to send a copy of it when I am done if you like. There are different types of agreements and contracts verbal (which is hard to enforce) and offer and acceptance, exchange of things of value etc. If you like here is some information:

You and your partner should spell out your rights and responsibilities in a written partnership agreement ( establish shares of profits or losses, each partner's responsibility, what will happen to the business if a partner leaves etc.) to avoid ANY minor misunderstandings if not the rule is that the state's law will control many aspects of your business.

If you refer to the Uniform Partnership Act which is a law that established basic legal rules that apply to partnerships and will control many aspects of the partnership's life unless you set different rules in a written partnership agreement.

Things you might want to include:

1. Name of the partnership

2. Contributions to the partnership (who is going to contribute cash, property or service and what ownership percentage each partner will have, if cannot contribute monetary can contribute by work, etc)

3. Allocations of profits, loses and draws.

4. Partner's authority (to prevent one partner from binding the business

5. Partnership decision-making ( management styles, etc..)

6. Admitting new partners

7. Withdrawal or death of a partner

8. Resolving disputes

9. Defining financial and management structure (chain of command)

Don't be tooo specific but don't be too vague either. Have everyone sign it and notarize it and give a copy for each and have one on file. Review it annually. Keep good records. Have monthly meetings and keep notes. Keep each other informed. Talk about the problem when it occurs and not let it stew for a long time. Have realistic expectations . Know your personal expectations, limitations,ethics and values. Understand not everyone will share your enthusiasm and will get things done in your time frame, be realistic or will do things like you, it does not make it wrong. Don't delegate to your partner something you would not do yourself. They are individuals. Don't boss each other. Do a real analysis of your personality and your partners to find the strength and weakness. A partnership is like a marriage or like cloths, " you should try it on before you buy it" Maybe have a neutral party available for discussions. Be honest and up front. You can't be scared to discuss things with your partner.

Like a plan of care or action plan, if this... then that...

I have been doing all of my legal work myself and lots and lots of research. Arm yourself with knowledge. I am willing to help and share my knowledge. We have to start some where. Lawyers are expensive get all of your ducks in a row as much as possible BEFORE you go to see one.

Any-who, this is my "wax drippings" for what it is worth. If it is unwarranted, sorry.

Tilly

[Jane42]

Tilly,

I appreciate your response. I did start searching for forms - it is definitely a good idea to have as much of the "leg work" done so that any lawyer fees involved can be kept to a minimum.

We have worked with a gentlemen from the SBA, but he just told us to "google" a form, or go to an office suppy store................I have not been getting "warm fuzzies" from our meetings....lol. We seem to walk away with more questions than answers.....

Thanks!

Jane

[cestlavielumiere]

Jane,

I am glad I can be of service. I have gone to Office Depot and they have 2 CD ROM's on Forms for business and LLC. Office Depot also sells an excellent monthly records book, produced from the company of Adam and it has lots of useful information about how to set up your forms, and record keeping. I have found them extremely useful. I also have some friends with small business ( Beauty Shop, Realtor) who have also shared some of their forms (but not the " what they don't tell you in school type business information") with me and I have taken bits & pieces to create my own. I am sorry that your SBA is not too helpful. I have just started on the business road and I am learning every day. I am a trauma nurse and this is all Greek to me, medicines and treatments I know, however wax type, scent mix, well lets just say I am a novice. I do not mind sharing my information. This is stuff I wished someone would have told me. Also, believe it or not, the IRS has an excellent web site with FREE classes (yes Something Free from the Government; you have paid your dues now take in the rewards) the classes are on small business and there are free DVD's about record keeping. If your SBA is not working try another SBA in another area. Do some reconnaissance work, learn it first hand.

I am working on this "Business Plan" thing (as you can tell, I am a very easy going individual). I am trying to learn the language and a lot of the stuff does not really apply. I didn't get a small loan, I do not have employees, etc. I feel like I am in school all over again. I wish I could find a copy from someone who did a candle one and tweak it to fit mine.

I am glad to help if you need me. What is the nature of your business if you don't mind me asking?

Tilly

[Jane42]

Tilly...right now we make paraffin jar candles, votives and sachets. We have been "playing around" with soy wax for awhile also.

We are "between" hobby and business....meaning, we have insurance, sales tax id and DBA, but we really have not sold alot. We both work full-time, and we only sold around the holidays - and are only planning on selling around the holidays. We have the basic jar candles and votives to our liking, but still have many more scents test and are anxious to get testing more soy candles.

I understand when you say that all this is "Greek". The SBA person said we really needed to talk to a "tax person"...either an accountant or an attorney...both of which cost money we don't have right now. We are trying to get as much together ourselves, so when we do go to someone to help us we have everything we need.

Right now my partner just moved about 30 minutes from me...into a different county (her home is where we make our products)....we realized we had to change the tax id info, then it occurred to us that the DBA also needs to be changed - and since she just moved to a different county, how is that going to affect it. Darn, there are just always questions, and all I want to do is MAKE CANDLES...lol I think we need to take one ONE more partner.....to do the books and make sure we are covering all the bases!!!! lol

[Rob in tx]

I strongly feel partnerships are very risky and you should know them very well. Make sure you both have ideas and one is not going to ride on your ideas but will want to make all the decisions. That does not work at all, believe me.

One thing is a General Partnership and you can write that up and get it notarized anywhere. General Partnerships are different than a Business Agreement.What is really important in my opionion is getting the Business Agreement which will outliine all of your business practices, Policies, bylaws, etc. Just make sure everything is outlined and everything is covered. Then file it with the State. That way if something happens you are covered.

Be Carefull and Good Luck

Rob in tx

[cestlavielumiere]

Jane,

We were inbtw. hobby and business but due to "unforeseen (Well, saw it coming)" area competition, we chose to get the L.L.C. We am still trying to get all of the insurance stuff. Right now, like I said we work out of my house. One of the other partners live 5 miles and the other 15 miles. Every time that you change a name or add someone, it cost more money. Thank god for "attrition" in the tax world. You could have, just "opened a second shop" so to speak out of your house, just for "tax" reasons or a place "where you do your books." Is the new county a better tax break? I have been selected as the"quarterback" for our team so to speak because I did all of the research and development and the most experience in the field have. I do all of the books, designs, forms, etc.. We meet weekly and go over things so that way we are all on the same page. It sounds like you to have a great start, just keep it up. The old college saying "There is now I in team work" and it is "not ego but we go."

Speaking to a tax person at this time of the year is like is like asking hell to freeze over, IT JUST WON'T HAPPEN. Money is a big issue. Hobby-wise, well lets just say my husband has an expensive hobby too restoring old cars. Therefore it is the saying "money spent for car part equals to glass and wax for me."