Business partners..... I am wary

[mkzhang]

Hi guys,

I am starting to put together my business plans + more concrete research into the exact thing I am doing. Its time to step up to the next level from my small scale SEO consulting firm. Without going into too much detail, here is my dilemma:

• My current partner is my friend, former co-worker. He was the one that gave me the idea to go do my own thing. The problem is he is working full time as an assistant controller, he says he will contribute as much as me, but I have a bit of doubt in that. We have no contract set up right now.
• Personally, I am highly ambitious, very aggressive, and my weakness is I am selfish and a bit greedy. I love $$$ and it is the driving factor in my life (unfortunately).

I will be contacting a lawyer to draw up the LLC this winter. What should I consider for both the lawyer and my current partner?

• What should I look into or do without getting screwed over by possible greed?
• What should I do to plan for an exit strategy?
• What are some of the typical details between partners that you guys agreed on?
• How do you plan out who owns what? Who shares what % of profit?

Also,

• What should I ask my partner or talk to him about to test his commitment?
• What type of personality do you usual see in your partner that screams "run now" or vice versa?

Finally, I plan doing the LLC under my own name. My "partner" will be in name only. I am thinking of doing a contract base employment for him. The details as follows:

• Split will be 60/40 until he makes as much as he does now at work (45k a year).
• All revenue will be taxed, and expenses deducted before we split.
• Contract will be reviewed monthly for his performance (on my judgment) and terminated if he's not up to the job.
• After he reach 45k, I will review per month on his contribution, and give him bonus base on his contribution to the net rev.

Sounds like I am a greedy mofo don't I :smx4:. I am wary of bums and lazy people who talk the talk and never do the work. So since I will be pouring my sweat and blood into this while still in school, I better be in control of the cash just in case. But I also don't want to scare him off or make him feel like I will rip him off- which I won't, I have always been kind and generous to those I feel are honorable and accountable.

So how do I do this? Am I thinking along the right lines? Or should I change the way I think and stop being so defensive and greedy?

Thanks for all your help in advance,

Mike

 

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[Rakona]

Would you mind sharing what your friend brings to the arrangement specifically?

There's a lot of talent out there you can access without giving up a chunk of your company.

 

[mainstreet]

Being a former co-worker I assume you both have the same skill sets? That along with your own inhabition - I wouldnt take him on as a partner. Find somebody with a different skill set that lives in agression city with you. Most people get to a comfortable place and stop - you would be dragging him through the mud after that place is reached.

Ronnie Springer

 

[juntao65]

Working full time? Contribute as much as you?

Screw it, go solo. Partnerships are like marriages, making it is easy, but getting out is a bitch.

 

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[Operation_OPM]

Your post answered your own question. I see this a lot where friends/couples automatically assume they are someones business partner...don't do it. Better off having some success then bringing them in as a officer or paper partner of some sort.

 

[mkzhang]

Thanks for the advices so far, here is some more info to clear things up:

I was an marketing assistant and he is the assistant controller in my former company. We have different skill sets.

I have all the technical knowledge on the specific jobs and services our company will be doing where as he has none.

But my specialty is selling opening new contracts and maintaining them via on site consulting. And this unfortunately, does not leave me with any time managing the team that's doing most of the specific work.

Thus I was looking for someone loyal, willing to trust in me to give him a good cut. And in turn I will teach them all the specific skills and tools needed to do a good job.

 

[Jag]

mkzhang,

Does your partner have any driving interest or possibly passion for SEO? Passion is obviously not a requirement but it helps if the individual is more than passively interested in the subject. I am working towards starting an SEO firm (just in the learning stages now) and I have a good friend whom with I had consulted about becoming a partner. Problem was when we would get together he always spoke of and expressed interest in trying to something else as another part of the business (basically design and implement business efficiencies). I realized very quickly that we were not on the same page with regards to the SEO and so we have agreed to not take that on together/partner up in an SEO business and I will have to find someone else.

I guess what I am saying is it seems like you are bringing him on because hes a friend (and in my experience it provides a certain comfort level). I think you would benefit much more from finding a partner who's as passionate about getting your SEO biz off the ground as you are.

 

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[mkzhang]

Hi Jag, thanks for your insight.

My partner of interest doesn't have a driving passion in anything really (or he haven't discovered it yet), he is willing to learn if it makes money.

I felt that its okay if he doesn't, because I am shooting my business to be a jack of all trades but master of none type, so he does not need to become awesome at SEO, he will just check and handle SEO assignments to free lances base on my strategy. It is kind of similar to what your ex-partner was thinking with a built in SEO component since I have a good chunk of experience in that.

It is terrible because I can't spend all day working, as I am still pursuing my MBA. But without a reliable partner, I can't install my strategy and succeed

Where are you located by the way? If by any chance you are in NJ then that would be great.

 

[Bobo]

Paraphrasing:

Here are a lot of good reasons why I do not want to have a partner in my new business venture but I feel guilty about telling a friend he can't be my partner.


Advice: If you think telling him you want to go solo is awkward, wait til you have to fire him and sit across a courtroom from him when things go awry later.

If you can't make what you know to be the right business decision now it will only be harder, and more expensive, later.

 

[mkzhang]

Thanks Bobo. I guess the original plan of action was the best choice then, I can make him a partner in name only but he will be paid on a short term contract by contract basis with set goals/milestones that are up for review.

 

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[Jag]

Hi Jag, thanks for your insight.

My partner of interest doesn't have a driving passion in anything really (or he haven't discovered it yet), he is willing to learn if it makes money.

I felt that its okay if he doesn't, because I am shooting my business to be a jack of all trades but master of none type, so he does not need to become awesome at SEO, he will just check and handle SEO assignments to free lances base on my strategy. It is kind of similar to what your ex-partner was thinking with a built in SEO component since I have a good chunk of experience in that.

It is terrible because I can't spend all day working, as I am still pursuing my MBA. But without a reliable partner, I can't install my strategy and succeed

Where are you located by the way? If by any chance you are in NJ then that would be great.

mkzhang,

Located in northeast Texas (long ways away lol). I have to agree with Bobo, it would be more difficult to fire him later and get into legal matters. Like you said probably best if you only have him as an employee if you still feel the need to have him on board.

Totally feel you on the working on what you want to start all day thing. I can only work on my stuff after work and on the weekends and it's killing me. Can't wait til' I can go full speed on the biz!

 

[juntao65]

You don't want him as a partner, yet you want him cause you trust him to work in your company. You also want him to be rewarded well for his work.

Solution: Give him a piece of the annual pie instead of actual shares.

Adding partners is cake removing them isn't such a walk in park.

 

[Rakona]

Sounds like you're pretty clear at this point.

I started a business with a friend, 7 months in it was dragging along. I thought to myself, if this was just a business partner I had no history with, friendship etc, would I still be proceeding with this.

It didn't require a second of thought. Heck no.

I think someone posted a Netflix employee guidelines here somewhere. A questions from it could be relevant to you.

1. Would you do everything in your power to keep the this partner he told you he had plans to take a new job in 60 days?

 

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[mkzhang]

Thanks again everyone, for their advice and pointers.

Though no one was very specific on what they did to search for a partner... all the posts in here have helped me tremendously and pointed me in the right direction. I have made up my mind from here.

Thanks