BlaqK20

Me and my friend are currently trying to open up a small business selling smoking&tobacco related items. I've known him for a while and I know he is a good worker and also very dedicated to his work. Now, we both dont have high paying jobs so starting up will cost a few $'s. What he wants to do is bring in his friend, that I know as well but not as well as he does. This means that 3 people own/run this shop. I dont think its necessary but the additional start up money will be good. What do you guys think? Any personal experience with mutliple partners? Pros? Cons?

Thanks any advice is appreciated!

Aletheia

Are you forming a corporation or just opening a business? What ever type of business you do, make sure you do it all in writing and make sure each person involved knows what is going on.

qweds

hey blaqk20,

a friend and I are considering a similar move. We plan on opening a hookah cafe\lounge. Anyway what aletheia says is right, you have to get everything planned and written out. You need to write something that at least resembles a business plan. You need to figure out how the pieces are going to come together and you need to make sure you all understand what is going to be required and what you expect to get out of this.

a quick google search shouls provide you with most everything you need to know about putting together a brief bsiness plan. I'd say more but I'm just learning this stuff myself.

best of luck

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tim(mah)

Jinn

Stole this from some random website:

You will not need to be at the business at all times. You will have someone else who will be there to share the load and permit you to take a vacation and have sick time.

You will also have a highly motivated co-worker, not just someone who is earning a paycheck.

HOWEVER

You will have to share the rewards if the business is successful.

You will lose total control over the business, particularly if you and your partner have difficulty in making decisions.

You will have to share the recognition that will come if the business is successful.

A partner can be a disaster if his or her judgment is not good.

You run the risk of a falling out and perhaps the necessity of one partner buying the other out if you do not get along.


..I personally would try to keep the company "heads" small, simply because I want to have control over many aspects of my own business. Also -- remember that his investment capital only shows up now. His judgement and his control will be there for the life of the company (or until he is bought out).

I've met people I just couldn't agree with -- I'd hate to be stuck as the owner of a company (my financial success) with that type of person.

__________________
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BlaqK20

Thanks for the help. I decided to keep it to two business partners after all the consideration. It will be easier in many cases and also due to the fact that arguements will be of less likelyhood.

Daniel_

I'm glad of that - it occured to me that if you have three partners and one of them is HIS mate, you are in effect handing swing votes on tough calls his way. :S

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Cynthetiq

business partnerships fail worse than marriages do...

get everything in writing and some friendships may not survive it.... I speak from experience having to take my friend to small claims court because he wouldn't give back the equipment that was loaned to him.

that said... Good luck!

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pattycakes

with 3 of you you must decide who will be incharge. someone will have to be the boss, because it makes it a hell of harder to change if you start expanding.

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BCD

I'm a business and real estate lawyer and represent startups all the time. I think not including the third guy is a good idea, especially since he is friends with your other partner. In the event there was a disagreement it is likely that these two guys would side against you. Since collectively they would have a majority, you would lose every one of these disputes.

Also, with small retail businesses like this, keeping ownership to a minimum is important. These businesses tend to not generate a tremendous amount of profit. Usually enough cash is thrown off that one owner can receive enough money to justify the long hours, headaches and risk associated with owning a business. Add another partner and then you are getting to the point that you might simply be "buying a job" by starting the business. That is, after you figure all of the hours you are working, the amount of money you make from the business will be equivalent to what you could have made doing the same work as an employee for someone else; you would not be making enough to be properly compensated for your financial investment, the headaches (e.g., employee and customer issues) or risk associated with owning a business (e.g., liability for taxes, lease obligations, payroll, etc., etc.).

Make certain that you hire a business lawyer (and not a generalist who knows just enough to be dangerous) to properly document your relationship with the partner and help you with your lease (which will likely be your largest financial obligation). Also, get a CPA (not bookeeper) to help you setup your processes, so you do it correctly right out of the gate. Too often I see a business startup without proper guidance and they only call in the lawyers / CPAs when it's too late. Also, remember that your professional advisors can also offer other assistance, such as critiquing business concepts based on what they've seen work (and not work) with other clients and putting you in contact with "friendly" lenders who can help finance your deal.

Good luck,
BCD