StewartTreeCare
ArboristSite Member
Im out of wilkes barre, pa and i have been thinking about trying to merge with another company or take on a partner. Is it worth my time or would i be screwing myself in the long run?
Partner or Merge?
- Thread starter StewartTreeCare
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wilkes barre area, got family up that way in the tree biz, actually in york, trust your gut on this one, check out the merging to be partners background, even if you have an investigative firm do background checks & audits it might be worth the $$ & save you from a mistake or it could be the best move you make in this economy!
LXT................
LXT................
StewartTreeCare
ArboristSite Member
Dave
ArboristSite Guru
Partner Schmartner
Having a partner is like wiping your butt with poison ivy leaves- at the time it might seem like your best option but you will live to regret it. Voice of experience.
Having a partner is like wiping your butt with poison ivy leaves- at the time it might seem like your best option but you will live to regret it. Voice of experience.
mckeetree
Addicted to ArboristSite
Screwing yourself.
treeclimber101
UNCLE BUCK
Yea partners are tougher than wives because there not even easy on the eyes lol, but seriously I started my business with a friend from childhood and that lasted for 5yrs. and when work dried up we had new families and there wasn't enough revenue for two bosses and we split , that was the easy part the last five yrs. since the break have been hell because were constantly arguing over the customer base and return work from when we were partners , so think carefully about your future and how much stress your willing to endure ...
MonkeyMan_812
ArboristSite Operative
I think that it could benefit you if you KNOW the person that you are considering merging with. My advise would be to work together on jobs for awhile, a good long while, before you make any big decisions. And even that is not a guarantee that things will work out well.
treesquirrel
ArboristSite Guru
Do not form a partnership. They end ugly almost every time. I tried it. I almost went broke trying to float a business on my own while my "partner" just showed up when he wanted to earn some money.
There will always be one partner who is more serious about the business and the other so called partner pretty much becomes like an employee.
Also, you will be sharing the pocket book. One of you can run off with the piggy bank or spend the company into ruin.
There are probably more potential for huge losses and failure with a partnership than with a failed marriage.
There will always be one partner who is more serious about the business and the other so called partner pretty much becomes like an employee.
Also, you will be sharing the pocket book. One of you can run off with the piggy bank or spend the company into ruin.
There are probably more potential for huge losses and failure with a partnership than with a failed marriage.
Dave
ArboristSite Guru
EXACTLY as stated by Squirrel....
opcorn:It will be like two (male ) bears meeting in the woods- not pretty.Jeff
opcorn:
treemandan
Tree Freak
I have seen it work only twice. Both guys were very serious about doing what they were supposed to and worked very hard. Most likely they did not let the little stuff bother them , they both worked equally. They were both on the same page and had no motive but to do it together and move foreward. they were able to see the big picture and had trust. It was no whim, that is for sure.
TreeClimber57
Addicted to ArboristSite
Frankly not usually worth the effort.
The only way to consider this, assuming the above items mentioned are done (knowing individual, how you work together, etc).. is to set up a completely separate corporation.
Set up shares within the corporation (at least 2 classes of shares - important here - but you can do 3 or 4 - easy to do when setting up ) - decide a price and dividend for the shares.
You buy one class and the other individual buy another -- works best at dividend time .. or it can. This can be done on paper.. with lawyer and accountant. Then new corporation buys your two businesses out and becomes one.
Oh.. you also need a board of directors .. don't need to pay them.. but to help keep the ship even and on course. (also legal requirement here as well)
Sounds like a lot of work.. and it is.. but this is the ONLY way I have seen that can almost guarantee a success.
Now the benefit of the shares can come at tax time. If the company is making good money.. keep the bulk in the company if you can.. pay yourself and other owner the minimum salary you can accept (or can live on).. and take the rest as dividends vs income.
Ensure the company has policies, etc well documented. You can usually start out fairly simple here but get them in place as soon as you can.
If that is too much work.. then I would not recommend a merger .. but up to you.
The only way to consider this, assuming the above items mentioned are done (knowing individual, how you work together, etc).. is to set up a completely separate corporation.
Set up shares within the corporation (at least 2 classes of shares - important here - but you can do 3 or 4 - easy to do when setting up ) - decide a price and dividend for the shares.
You buy one class and the other individual buy another -- works best at dividend time .. or it can. This can be done on paper.. with lawyer and accountant. Then new corporation buys your two businesses out and becomes one.
Oh.. you also need a board of directors .. don't need to pay them.. but to help keep the ship even and on course. (also legal requirement here as well)
Sounds like a lot of work.. and it is.. but this is the ONLY way I have seen that can almost guarantee a success.
Now the benefit of the shares can come at tax time. If the company is making good money.. keep the bulk in the company if you can.. pay yourself and other owner the minimum salary you can accept (or can live on).. and take the rest as dividends vs income.
Ensure the company has policies, etc well documented. You can usually start out fairly simple here but get them in place as soon as you can.
If that is too much work.. then I would not recommend a merger .. but up to you.
StewartTreeCare
ArboristSite Member
OIC JOHN! Very well said, I havent broken it down that simple in my mind but know I have thank you!!!
gr8scott72
Addicted to ArboristSite
The only ship that won't sail is a partnership.
A trusted employee is worth ten possibly trustworthy partners.
All kinds of guys wanted to be my bossman's partner. It was easy to see why; my bossman is an honest and very hardworking guy who never screws anyone and gets good business. Any potential partner will want a piece of that action, but will that guy work as hard, be as honest, and bring in as much business? Unlikely. Unless you are exceptionally lucky, you get someone who just wants to sit back and ride the already-running gravy train.
Trusted employees and a proper delegation of authority - that's the key.
arbor pro
Addicted to ArboristSite
Nicely said.
I think a partnership is easier to digest when one is just starting out in the business (so long as each is equally committed to the business) than trying to form a partnership later on in the life of your business. At that point, you're somewhat set in your ways and having someone new come in to tell you how to do things might not fly so well.
I had a partner straight out of college when i got started. It lasted about 3 years. Partner was an outstanding guy and good friend. He worked hard and we got along well. We just had different opinions on where the business should go and he got out before he got too deep. I still consider him a good friend.
My brother took on a partner in his home remodeling business only to part ways less than a year later because they didn't share the same vision for the company. My brother was willing to work 60-hour weeks and sacrifice his own personal gain in order to further build the business. His partner was older and wanted to maintain his current lifestyle without any extra effort. On paper, the idea looked good to them. Each brought a little bit different customer base to the table. However, in reality, the vision didn't come to fruition because the motivational drive to succeed wasn't the same.
Partnerships can succeed if there is an equally shared vision. Statisticly, however, I would think that more partnerships fail than succeed...
KodiakKen
ArboristSite Operative
just one suggestion
when you sit down to dinner..take a knife..cut everything in half and throw it away..that is what a partner is good for.
when you sit down to dinner..take a knife..cut everything in half and throw it away..that is what a partner is good for.
arbor pro
Addicted to ArboristSite
Not exactly. If the partner helps to gather and prepare the food and, if you're able to make TWICE as much as you might normally make IN THE SAME AMOUNT OF TIME AND WITHOUT ANY ADDITIONAL COST, then splitting it in half may result in the same size portion as you would have gotten had you gathered and prepared the meal by yourself.
The key point is this: with a partner, your overhead and payroll is going to increase by a given rate so your income has to increase accordingly - at the same rate or greater than your expenses or you're no better off in the partnership. If your partner brings enough capital, knowledge, clients and labor to the table to increase your income ratio greater than your expense ratio, then the partnership may be a smart move.
However, what typically happens in partnerships is that efforts get duplicated or diminished and, whereas a man (or woman) working on his/her own might be willing to work a 12-hour day in order to reach the light at the end of the tunnel, two partners working together might slack off a bit and work only 10 hours a day because, initially, more work gets done with 20 man hours than it does with 12. However, the reality is that, between the two workers, productivity is really only increasing by 66% while expenses may have increased by 80, 90 or even 100%. Anyone can do the math - it's just a matter of time until surplus cash or savings run out and the partnership dissolves because it can't make ends meet.
The only way the above scenario will work, as I said earlier, is if both parties bring some ADDITIONAL capital, labor, knowledge and clients to the table so that the income factor can increase at a greater rate than the expense factor. If the incoming partner has no capital or additional clientel to bring to the table - only a strong back and willingness to work hard, it's not IMPOSSIBLE to make the partnership work but, it is much much more difficult because the income to expense ratio will be much tighter than if the incoming party had some paid-off equipment or cash to bring to the deal or at the very least a great customer base.
Hope this makes sense. It does to me since I've been there and done that but it can be hard to put into words when typing.
ForTheArborist
Addicted to ArboristSite
If there is nothing to lose, then why hesitate to lose it? It's a bet with your money, right? But it's a bet to play a new hand with some extra cards to your advantage. As long as you aren't going to lose any money or not enough to feel, why hold out?
Like the guy posted about getting all of the details on paper up front as well as while partners pass the months together, that's want you'll want unless you don't have a shilling of a cent of businessman in your blood as well as a sense of how people tend to get tempted to do what is shady when it's easy. It's a little like keeping your back to the wall at the card table, that way nobody can come to your six to collect when you're holding more money than you came in with.
Personally I think if they have spent part of their time in church or something like it, they can respect the rules of the deal. If they haven't, they don't even know that they are going to break the rules down the road yet. That is two different products of people there.
The rule of thumb though is nearly everyone has no business in a business partnership. They just ARE NOT cut out for it like mountain faces are good for running touch downs up. The rest of the people that are cut out for it are probably not into treeing anyway.
Like the guy posted about getting all of the details on paper up front as well as while partners pass the months together, that's want you'll want unless you don't have a shilling of a cent of businessman in your blood as well as a sense of how people tend to get tempted to do what is shady when it's easy. It's a little like keeping your back to the wall at the card table, that way nobody can come to your six to collect when you're holding more money than you came in with.
Personally I think if they have spent part of their time in church or something like it, they can respect the rules of the deal. If they haven't, they don't even know that they are going to break the rules down the road yet. That is two different products of people there.
The rule of thumb though is nearly everyone has no business in a business partnership. They just ARE NOT cut out for it like mountain faces are good for running touch downs up. The rest of the people that are cut out for it are probably not into treeing anyway.
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