You might have a great business idea but lack the capital. You might also have capital you lack space, time or a great idea. It’s therefore a good idea to partner up with someone and join forces to make it in the business world. Most business empires In the world were started by a group of people/friends and turned out successful. The idea may seem stupid and pathetic at first but if you persist and give it your best it may surprise you.Join up with someone that is willing (preffarably not family) and try something out.
currently in one, though am already frustrated with the equation of what am doing as opposed to my partner
Been there, done that. Business partnerships are tricky because of joyriding. It only makes sense of one person is a silent partner with no responsibilities, but a lesser paycheck. 50/50 partnerships where both partners oversee day to day operations hardly work. Let me explain. A buddy of mine is a silent partner in a nightclub company. His share is 40% while his partner controls 60% and oversees the day to day operations. In profit sharing, my buddy gets 25% of the profit, while the active partner gets 70% plus a monthly salary like any manager would get. They have been partners for three years and so far so good because they are both happy with two profitable establishments. My friend does not mind getting 25% profit share from a passive investment, because that profit is usually more than he could get from any other passive investment he knows.
NB: These are childhood friends, sio watu wamejuana juzi
problem starts when the silent partner starts envying the other 75% thinking he deserves more
There is a written and formal agreement. The silent partner inspects the books at his own will for complete transparency. He accepts a lesser portion of the profit because he doesn’t work there. To him, it is a passive investment. He is also allowed to be the cashier once in a while when he feels like, so that he can have an idea of how much the club is making. Partnerships are hard to implement, especially when all partners are active in the business.
After being in a collapsed partnership I think partnerships that work we are those that involve total strangers or people that have meet through work.
Partnering with friends or relatives is a very big mistake due to the fact that it is hard to evict the joyrider.
Best option would be if there is a vesting period(4yrs) and cliff (preferably 1yrs) set that allows the original founder to get rid of the other person in case they joyride. These agreements help on getting rid of joyrider.
Equal partnerships also in most cases never work. There should always be a majority shareholder to prevent decision deadlocks
i guess that’s where mine hit a quagmire, i had no kind of an written agreement
Well said.