I have been working for a client for the past year or so and have great trust in him. He has always kept his share of the deal and paid me on time. I am a relatively new entrepreneur and have never partnered with anyone else to start a business. Recently, during a discussion, we got the idea about developing and selling a certain kind of website. He suggested that we do this together and I assume he means a 50-50 partnership. I haven't gone into the partnership details with him on this yet. The idea is that I will develop the website, maintain it, SEO/market it and provide the customers with monthly reports, etc. while he will find the customers using his sales people. I like the idea very much and trust him too. But what irks me is that I feel like I am doing most of the work, and throretically, I could actually hire the sales people myself and do this on my own. However, in practice, I am so busy that I know I will never get to it unless I am partnering with someone, which sort of establishes a commitment on my part. The other benefit is that I don't have any relationships with sales people and will have to find and hire new ones while he already has people that he has been working with for a long time so it will be easier to get the idea going if he does the sales portion. Also, another way to look at it is that he could hire someone to do the web development and maintenance for him too and do this on his own to keep the thing to himself instead of sharing 50% of the profits with me. But he wants to do this with me and does not seem to think that way. What do you guys think? Should I go with the 50-50 partnership or should I wait and try to do this on my own? Thanks in advance for your time. Your advice is valuable to me. Srini
well i suppose the partnership thing varies, it might look very promising but it has its own cons as well. untill you are very sure that you guys wont have any sorts of ego clashes, i mean who works how much but even then both the partners have an equal share. he might get busy for something else and some thoughts might creep in ur mind. this is very practical and natural to happen. personally i am not in favour of any sort of partnership but looking at all the available pros and cons, you are the best judge. Gud luck!
Personally, I would do it on my own if possible. Maybe work out a strategic limited partnership if there is any real advantage. I have been burned on partnerships, even though I have the majority of the company. It's hard to get rid of them when they stop doing work, or carrying their part of the bargain. So I would try and stay away unless there is no other option, or completely needed. Like they are supplying the cash, and silent, and not going to interfere in day-to-day operations. If it's anything where you do work, and they do, you need an LLC, and an operating agreement spelling out who is responsible for what, and what happens if they falter.
My concern would be with you saying that "we developed the idea," thus suggesting that this site is something that came from a brainstorming session between the two of you. If you trust him and he trusts you, then I think you'd be destroying that bond by cutting him out of the loop when the idea seems to be just as much his as it is yours. As you said, he could easily place a monetary value on your portion of the partnership and exclude you. Having a partnership with someone should go beyond the simple value of their services. Do they have the same mindset that you do? Can you benefit from each other long term?
I started a site with a guy that I used to work with over half a year ago. It was hard I remember (as his temper, quite often, took the best of him) and he dumped over 90% of the work on me. Something serious happened to me - I was in the hospital for about a month - and the site was down. My partner knew nothing from a technical standpoint, so the site is now gone. Take this into consideration, what if something happens to you? Not trying to be negative, but will your partner be able to maintain the business upon an emergency?
I like the idea very much and trust him too. But what irks me is that I feel like I am doing most of the work, don't even start this partnership if you already think you work more than he is I know lots of successful partnership that fall apart simply because one of the partners thought he was working more. Ironically, these people found out later that they simply were not able to do this part of job at all.
I'd have to agree with much of the sentiment above, partnerships are tricky, even among friends who have the best of intentions. I knew someone who created just the kind of 50-50 tech/sales partnership you are referring to. The tech guys made the software, the sellers simply couldn't deliver sales. But they still owned 50% of the company. So the tech guys had to buy them out to regain control. How about pay for performance? You own the company, you build it. If your client can deliver sales, pay them handsomely and promptly. If you can make this work over a few years, then maybe consider partnership, if you still see a benefit to that. Best of luck to you, but please be careful, partnerships and being new to self employment, probably not a great plan. Get some experience first.
is not one else finding issue with the fact that he seems to be willing to walk away from a brainstorming session and claim ownership of an idea? i'm all for cut throat business practices, but i think you have to draw the line somewhere.
I guess I should chime in too. All of the previous attempts to partner with others have ended prematurely due to various reasons. One of the recurring issues was related to individual contributions on the project. I am a software engineer and have always been tasked with the architecture, design, implementation, and testing the solutions. This would require thousands (1000s) of hours of personal time. Other members chose to align themselves with marketing, sales, etc. I do not want to discount the experience required to perform these tasks, but it was clear (only to me) that I was tasked with the largest effort for equal shares. I threw everyone under the bus and excused myself from the project(s). If you do choose to partner, consider establishing a business entity and vehicles to protect your intellectual property. I am not implying you should be paranoid or question everyone’s motives, instead just use common sense and approach with caution. Good luck!