View Full Version : Partnerships - Business ones, any comments?
Hi, i started my own computer repair business about 2 months ago, business isnt really booming at the moment, but i dont expect it too, as i have done advertising yet, the only thing bringing customers my way is the every handy google.
Anyway, ive been working with this multi-millionaire person, fixing his pc, and building him a pc for his film company..
Anyway, weve been getting on well and hes sent a few jobs my way, when yesterday he emailed me asking what i would like to see the business doing in a few years.
So i explained, i had a few ideas, but am not currently in a financial situation that is suitable for me seeing the ideas through.
I explained that i will get there in the end, and business is going ok.
Then this morning, i receive a email asking if i would like to form a partnership and he can make some nice investment into the company.
Is this a good idea?
Basically at the moment, the company has hardly any money, theres couple of hundred quid in the business bank account right now and thats it.
The man that asked me knows nothing about computers etc, but does have the financial situation to be able to invest a fair bit of money.
So basically, i would do the work, he would invest the money.
Now also, this man is 73 years old, and does have a form of cancer, and to be honest, i cant see him living more than 10 years from now (hopefully he does as he is a lovely old man).
Now what happens if i do say yes, and he dies in the next few years?.
Any comments and ideas would be helpful.
Basically, if i continue like i am, maybe more business will come, i have got stuff printed i need to distribute about for advertising. But im not in the financial situation to do anything else.
If i took the partnership, business may be higher as could start a bigger advertising campaign, also i could start other projects, like making custom pc's, and buying and selling of components, as the cash would be available for me to do that.
I can see pro's and con's of both. so any advice would be helpful.
Oh also, currently i drive my (old and battered) car to customers houses, and always wanted to go buy or lease a nice new van to use instead as it would look more professional.
The 'Partner' has offered to go buy a van straight away...
The problems I see without looking to deep are what % of your business does he want for what amount of £. Only you can answer weather or not you want to loose that %.
Do you REALLY need the money for your business to grow?
He says now he knows nothing about the PC business but is he one of them people who will try to "impart his business knowledge" and generally be a :censored:
The dying thing will have to be a clause if either of you die what happens etc.
If you do do it do not do it without the proper paperwork etc
i dont think he wil try and be a .... as i said, hes a pretty old man now, lovely man, and hes made his money, and hes admitted to me, that before when he was making his money he was a bastard, thats how he made it. Now hes made it and hes old, hes said that he doesnt need to be like that anymore and doesnt want to be..
And i replied back to his email today and said (as i was going there tomorrow anyway) that we can chat about it face to face tomorrow and he replied this ;
"In order for you to cogitate before we next meet here are some observations.
In a partnership eventually there is always a problem that goes:
I do all the work so why am I sharing the profit !
and the other one is:
I supplied the wherewithal so why is he grumbling !
Partnerships are not an easy thing and so give it careful thought first please. "
So he is being very honest, as he is also saying partnerships can go wrong.
Obviously if a decision to go ahead happens, we will get legal papers drawn up etc..
Thanks shaky for your advice and all your do do 's lol.
Mr. Grapes
28-06-10, 14:00
on paper, it sounds like the ideal investor...
make sure you run some numbers to prove it's viable medium to long term, as when you meet face to face, you should definitely have at least a few scenarios worked out.
It's very difficult to build a successful business without cashflow, this is something he can offer. You need to decide for yourself really as you know him but it could be a great opportunity for you to do something you love and be successful. It's really important to get everything laid out from the off and forget about any friendship. I've been in partnership with a very good friend before and set things out very casually which inevitable lead to loads of problems down the line. If there is any aspects either of you are not happy with then it's not worth it. Good luck though whatever you decide
i dont think he wil try and be a .... as i said, hes a pretty old man now, lovely man, and hes made his money, and hes admitted to me, that before when he was making his money he was a bastard, thats how he made it. Now hes made it and hes old, hes said that he doesnt need to be like that anymore and doesnt want to be..
And i replied back to his email today and said (as i was going there tomorrow anyway) that we can chat about it face to face tomorrow and he replied this ;
"In order for you to cogitate before we next meet here are some observations.
In a partnership eventually there is always a problem that goes:
I do all the work so why am I sharing the profit !
and the other one is:
I supplied the wherewithal so why is he grumbling !
Partnerships are not an easy thing and so give it careful thought first please. "
So he is being very honest, as he is also saying partnerships can go wrong.
Obviously if a decision to go ahead happens, we will get legal papers drawn up etc..
Thanks shaky for your advice and all your do do 's lol.
From the above he's saying he doesn't want you to grumble about doing all the work and sharing your profit as he gave all the investment, which I think is pretty fair. Would depend on the equity split i suppose!
true, because that is the case, he cant do any of the work at all, but i cant provide the cashflow, so both are needed.
But what is a good share for both of us?, does it all depend on how much money he invests?. As i have no idea on any of this really :(
a la dragons den if he's investing a large amount I guess 20-25% equity in the business?
So do you have a premises?
If not then you need to price some up, as walkins are gonna be a big source of your income.
What stock are you going to need?
Being a millionaire i imagine he has a lawyer on his staff, which'll keep fees down but i suggest you employ your own to double check any contract.
If he's a silent investor then ideally you don't want to sell him half the company, as he said you are going to do all the work, so he shouldn't see half the profits.
I would sell him 20% for £25,000, that should keep you in stock, advertising and a shop for the next 18 months.
Make sure you have an option to buy it back out if he dies or to whomever it'll pass onto.
Do you REALLY need it? A nice van/car, etc is all good and well but do you need it as much as someone looking over your shoulder?
ok how about this as a option, is this better? i have thrown his way a idea about i keep my business mine, and how about starting up a new business for the sales etc, and he would a part of that?. does that sound better to people?, but then that means im running 2 companies..
Do you REALLY need it? A nice van/car, etc is all good and well but do you need it as much as someone looking over your shoulder?
Concur you can get a decent looking company car/repair van etc for less than £3k!
ok how about this as a option, is this better? i have thrown his way a idea about i keep my business mine, and how about starting up a new business for the sales etc, and he would a part of that?. does that sound better to people?, but then that means im running 2 companies..
sounds overly complex
Would a bank loan be easier? With a good business plan and if you can prove cash flow a bank should be able to get behind you
it does sound complex, but if things go wrong, have still have my business thats mine....
I cant see a bank loaning me money right now, as i have no cashflow at all at the moment, and i was outta work for 2 years, my personal account doesnt look amazing either, a bank would look mad to lend my business money right now. Hell, my business relationship manager wont even give me a debit card for my business account until ive shown i have cashflow, to buy things for the business, i have to transfer money from the business account to my personal account and use my debit card to pay for things. :(. So i really cant see my relationship manager allowing a bank loan at the moment.
Ouchy, Barclays were fine handing cards over to me etc, and I must have got loan offers a few times a month from them.
Have you got a business plan?
Edit: A proper plan ;)
the bank didnt actually ask me for a business plan when i opened the account, altho they did at the time offer me a debit card, and when i didnt receive it, i ran the commercial banking people and got told with my current cashflow, no.
I do have a business plan, maybe no amazing, but that could be about to change?.
I mean a proper plan written on paper with a serious what you want out of the business etc. Until you really know that I suggest you wait.
Edit: Sorry if that sounds harsh
If he wants to invest in a similar business in Devon, feel free to give him my details :lol:
Mr. Grapes
28-06-10, 16:28
gmunday, if ypur address really is 1600 Pensylvania Avenue, Washington DC, you should n't have too much trouble with cashflow!
yep i have that, but ive had new ideas about new directions too, and im thinking that possibly a new company to handle the new direction is a way to go, and ill still do the computer repair with my business?..
gmunday, if ypur address really is 1600 Pensylvania Avenue, Washington DC, you should n't have too much trouble with cashflow!
aha, someone actually looks up the coordinates!, i wondered when someone would ;p
A lot of it depends on having a good idea what he wants out of it too. As a money earner or just a token % of ownership to help someone who he can
aha, someone actually looks up the coordinates!, i wondered when someone would ;p
He was probably trying to find this millionaire of yours ;)
finding millionaires around here is actually quite easy, i live on the outskirts of ascot, berkshire...... where royal ascot races are.... where lots of tv celebs live, and yeh mainly millionaires.
Sadly i dont have that kind of money, hence why im 'on the outskirts'..
Mr. Grapes
28-06-10, 16:52
aha, someone actually looks up the coordinates!, i wondered when someone would ;p
well doing the odd bit of geocaching, i'm aware of what should be in the range for the UK, and that was nowhere near :D
My Finance Tutor at University said to avoid Partnerships at all costs, because if you get into debt and your partner splits you're in trouble.
michaelkenward
28-06-10, 22:27
Has he asked for a business plan?
If not, run a mile.
If he has, what did you say? (Don't answer here, but in your head.)
How many people do you want to employ? What is your turnover target?
Is there a role model out there, a company that you would like to emulate?
What is your target market? What do they look for in suppliers?
What is in it for this investor? Is he looking for someone to launder money? (Don't laugh, it happens.)
I have just come away from an evening with some serious financial investors. They are not happy about venture capital, aka vulture capital. One was a lawyer who charges a fortune for that sort of advice, but they are clinical in their approach to such deals.
I would not want to do down anyone here, but I'd seek some serious financial advice.
Hard to know where to get it, unless you know people locally in the same game.
In other words, switch on your cynic mode and turn it up to 11. If the idea can survive that test, give it a thought.
Good luck whatever.
age old adage, and I think fits.
If it sounds too good to be true, there's a high chance it is :)
DT.
ok thanks for your advice people, i have gone to see him today, and yes im going into a partnership with him, but on a new company, my company runs seperate (and my business will get benefits from my other new company, as in i can claim vat back, i get premises to work from and my mobile and diesel paid).
We have a premises, we have the capital, ordering a van for me to drive (which is handy as my car is dying :s). Now we need some website design, anyone here recommend anyone?.
as yet, there are no debts, and i cant see any at the moment, as there is a fair bit of capital :). ive explained everything i want out of the company, he has said his. I think were pretty compatible to be partners, and were getting all the legal stuff sorted.
Basically im being cautious, and nothing is legal yet, but i think ill go thru with it.
good luck to you fella,
just hope it all works out for you and you make a go of it
Just sent you a PM with some ideas :)
as above if you need any advice dont be afraid to ask via pm or on the forum
i run my own business as no doubt many others on here do. its a daunting thing to go it alone and its a bleeding confusing world out there on your own,
need any advice give holler
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