To partner, or not to partner? That is the question.

Spouse and I started our own professional business ten years ago. Now, a friend in the same profession is interested in a partnership, something we've discussed on and off for 12 years. The problem in the past has always been that he needed to get his finances in order before he could afford the risk of months with slow or no income that occasionally occur.

Having been in business for 10 years and seeing the ups and downs in work flow/income, we believe they would be fewer and perhaps less drastic if we grew the company, expanded, and brought in this partner who already has several clients lined up to follow him.

Overarching Concerns:
*Potential partner has perpetual problems managing money - always goes for the instant gratification, always in debt. But he would be excellent when it comes to sales and schmoozing customers.
*Never having had a partner to deal with, but knowing people who did, we realize there can be problems ranging from personality issues to simply putting in a fair share of hours to constant battles over direction of the business. We're content now, even if we are bloody poor some months so we're not eager to take on problems.


So tell me your partnership stories - good and bad. Tell me how you made it work, what pitfalls to watch out for and what to consider.

I know this is a slow forum, so I'll be watching this post over the course of several months. We won't be making our final decision until after the first of next year. Even then, your responses might help others.

We had a partner who we thought the same thing. She brought connections, but little else. When push came to shove, she was breaking the company rules, constantly taking time off, etc. When I blew up at her for not even living up to her part time schedule we agreed to, she quit and wound up costing us a good but of money for a company that is not worth anything.

If you do bring on a partner, be sure your partnership agreement is clearly spelled out, including dissolution etc. We were fortunate our attorney put in several clauses into ours, such as arbitration only.

DBDB

the kind of partnership lawyers go into. Keep your own books, keep your own hours, but share costs of keeping an office while working together to keep customers happy. That way the partner works as much or as little as they want without hurting the whole.

Obviously a lawyer would be a great person to ask about this. Still, I want to be as fully informed as possible making this decision so I'm hoping everyone will help me out.

Linmited Liability Partnerships and COrporations are a great way to go. They are inexpensive to set up, and allow the partners to pay in a way that is not linked to ownership. Ours happens to pay profits instead of w-2 wages, and we are set up at 33% for each of the three partners. When we were set up with 4 partners, and one wanted to go part time, we just vited and changed the distributions to reflect it.

The key to any of this, however, is a good partnership/operating agreement that spells out as much as possible, including the number of partnership votes required to change things. We were fortunate to have a good one written by a lawyer that prevented a partner from suing us over the value of her shares. It clearly defined the rights and responsibilities of each partner.

DBDB