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The problem is not "having a business partner"... The problem is YOUR ability to choose a good one...
Think about that for a second.
Think about that for a second.
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Free registration at the forum removes this block.Why are people inclined to get business partners? It's a TERRIBLE idea. In general you should NEVER get a business partner.
In general
NEVER
I would advise person B to avoid partnering up with person A because it's a very bad choice.
The guy probably used the money to go vacation in Vegas and buy a lowering kit for his car. How stupid did that guy think you were to think that you'd accept his grandma's funeral 7 years after her death excuse? I don't get what you were thinking by taking on a business partner. How in the world did you think that guy would benefit you? I wouldn't have hired him as a minimum wage employee. You would've been better off giving ownership of the company to a dog.
No the problem is math. A 50/50 business partner has to increase the net income of the business by 100% in order for that business partner to benefit you. It isn't enough if the business partner increases net income by 30%. The debate isn't that a business partner is better for the business the debate is centered around whether or not a business partner is better for yourself.
The problem is not "having a business partner"... The problem is YOUR ability to choose a good one...
Think about that for a second.
When I decided to go fastlane last April, I got a business partner. A few months later I ended up being the one that did all the work while he complained I wasn't doing enough then he took all the money I made out of the corporate account. Said he needed it for his grandmother's funeral. She died 7 years ago. I'm not going to say this is going to be everyones' experience if you end up deciding to go into business with someone, but I strongly recommend doing it yourself.
What's true for you is not true for everyone else.
http://visual.ly/8-famous-business-partnerships-really-worked
The problem is not "having a business partner"... The problem is YOUR ability to choose a good one...
Think about that for a second.
What's true for you is not true for everyone else.
http://visual.ly/8-famous-business-partnerships-really-worked
Why are people inclined to get business partners? It's a TERRIBLE idea. In general you should NEVER get a business partner.
1. It requires that the partner benefit you more than the cost of giving up ownership. If you give up 50% of your company then the company would have to earn 100% more profit for the partner to be beneficial to you.
2. You usually can get an employee instead of having the skills that the person offers.
3. Most business partners do not have a business already either because they are new entrepreneurs or their past businesses were total failures. In other words they don't know what they're doing. Why would you partner with someone who never started a successful business before?
4. Lots of legal issues. For example you can't open up another business that's similar without risking a lawsuit from a business partner.
5. If a partner doesn't do anything and you have to do all the work then you have little recourse.
6. Legal costs should be higher since the operating agreement should spell out if money can be contributed for a percentage of ownership. If you get a boilerplate operating agreement from Legalzoom for example it might not have the provisions needed to protect you from getting screwed over.
7. Your partners might want a salary when the company is low on funds or blow money on worthless stuff.
8. Time is wasted with partners when it could be focused on the business.
9. You have less control of your business. More than likely a bad thing.
10. Partners can raid corporate bank accounts and run off with the money. If you wouldn't trust a business partner with $20,000 of your own money under their bed then you shouldn't have them as a business partner.
11. The business partner who actually wants the business to succeed will be doing most of the work.
12. Ever go to any business networking events? Total losers everywhere. What ends up happening is that the 50yr old sandwich shop guy gives you a brochure to go to his hole in the wall sandwich place. It's just business people trying to advertise to get more business. These are the same kind of people who want to be a business partner. No thanks. I don't want to end up like that.
13. You basically admit that you can't open a business on your own because you're too stupid to do it yourself so you need the help of someone else. Only problem is that someone else doesn't know either.
14. Multiple business partners virtually guarantee your failure. If there are 10 business partners or lets say 4 business partners with VC and you're left with 10% ownership then even if the business makes one million net income you'd only get $100,000 and a job basically. Not many businesses ever make it close to that level to begin with. You'd be better off if you started the business yourself but it only made $120,000 profit.
So in general I would say that you should avoid taking on business partners. Does anyone else have experience with business partners?
Why are people inclined to get business partners? It's a TERRIBLE idea. In general you should NEVER get a business partner.
1. It requires that the partner benefit you more than the cost of giving up ownership. If you give up 50% of your company then the company would have to earn 100% more profit for the partner to be beneficial to you.
2. You usually can get an employee instead of having the skills that the person offers.
3. Most business partners do not have a business already either because they are new entrepreneurs or their past businesses were total failures. In other words they don't know what they're doing. Why would you partner with someone who never started a successful business before?
4. Lots of legal issues. For example you can't open up another business that's similar without risking a lawsuit from a business partner.
5. If a partner doesn't do anything and you have to do all the work then you have little recourse.
6. Legal costs should be higher since the operating agreement should spell out if money can be contributed for a percentage of ownership. If you get a boilerplate operating agreement from Legalzoom for example it might not have the provisions needed to protect you from getting screwed over.
7. Your partners might want a salary when the company is low on funds or blow money on worthless stuff.
8. Time is wasted with partners when it could be focused on the business.
9. You have less control of your business. More than likely a bad thing.
10. Partners can raid corporate bank accounts and run off with the money. If you wouldn't trust a business partner with $20,000 of your own money under their bed then you shouldn't have them as a business partner.
11. The business partner who actually wants the business to succeed will be doing most of the work.
12. Ever go to any business networking events? Total losers everywhere. What ends up happening is that the 50yr old sandwich shop guy gives you a brochure to go to his hole in the wall sandwich place. It's just business people trying to advertise to get more business. These are the same kind of people who want to be a business partner. No thanks. I don't want to end up like that.
13. You basically admit that you can't open a business on your own because you're too stupid to do it yourself so you need the help of someone else. Only problem is that someone else doesn't know either.
14. Multiple business partners virtually guarantee your failure. If there are 10 business partners or lets say 4 business partners with VC and you're left with 10% ownership then even if the business makes one million net income you'd only get $100,000 and a job basically. Not many businesses ever make it close to that level to begin with. You'd be better off if you started the business yourself but it only made $120,000 profit.
So in general I would say that you should avoid taking on business partners. Does anyone else have experience with business partners?
What's true for you is not true for everyone else.
http://visual.ly/8-famous-business-partnerships-really-worked
What about if you need $5MM in capital? How long will it take you to get there by bootstrapping yourself?
What about a strategic partner who has the ins into places you would never get into?
What about operational partner who handles all the things your terrible at,
freeing up your time to be used for your highest value activities?
Never get a business partner?
Better to be a 20% part of a $10 Million project than to be a 100% owner of 200k if you ask me.
"If you want to go fast, go alone.
If you want to go far, take a team."
Instead of being so preoccupied about owning 100% of a business... maybe ask yourself if you'd rather own 50% of something 5X as big, while having camaraderie along the way.
The problem is not "having a business partner"... The problem is YOUR ability to choose a good one...
Think about that for a second.
For the last two years, he's been building his own landscaping company in the same community, doing the same thing. Building up assets, a network, knowledge of the industry, etc.
We decided to team up and combine forces instead of working separately. He sold some of his equipment that was a duplicate of what I had, brought some cash to the table, ad we're splitting my corporation 50/50.
It's also better to own 100% of a business that's 5x as big as a partnership business that you own 20% of.
This is basically M&A and the benefit wasn't that great. Actually it can be pretty bad depending on the tax situation. If the corporation is in a higher tax bracket because of this then that's something to consider.
Might as well play devil's advocate here.
What's the likelihood that 1 A player is going to build something 5x as big as 2 A players?
I just don't understand how you think it would be a liability to have a partner who's going to substantially contribute to a business. It's a classic example of 1+1=3. There are going to be tons of benefits to a company by bringing in a partner who's equally as invested, motivated, intelligent, hardworking, and capable.
Not to mention your logic of being worried a corporation's going to be in a higher tax bracket... clearly you'd rather just earn $5K a year to avoid taxes on a $500K income.
Math has nothing do with it... Quit blaming other outside factors!
If YOU choose a business partner that increases net income by 5000%, then YOU made a good choice.
If YOU choose a business partner that runs off with your money, then YOU made a bad choice.
Math is only relevant AFTER the fact...
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