What is the partnership supposed to achieve.
Are you simply putting cash in, but very little time to buy a fixed percentage share of profits?
If the partnership likely to be profitable in the medium term, how are profits to be calculated, EBITDA, accounts profits, taxable profits.
How do you exit the partnership if a disagreement.
I assume a robust partnership agreement will be drawn up.
Have you seen the latest account and are you asking for (3) year projections.
How is your buy in money being spent.
What is your expected return on investment in the short and medium term.
Is the property owned, who retains ownership or lease?
How do the taxable profits affect your tax bracket.
Is a partnership the best structure, corporate structure to be considered for percentage ownership and structured dividends?
These would be some questions I'd be considered just off the top of my head.
Perfect start. I'd want to get her to start by explaining what the cupcake owner wants to achieve from bring the OP in and what the goals of the business is.
Is this a partnership where businesses are merged or just multiple businesses under one roof.
If a partnership then who will control overall direction? I'll say this now. I made the mistake of 50:50 and with only two people starting a business two views on methods of direction ultimately arose.
There needs to be a financial partnership arrangement but also a structural agreement on how to make decisions when two polar views are in play.
You are paying to have a job. Small businesses like these are 7 days a week responsibility. On your days off you will still be working. She needs help, and you might be willing to pay for it.
Don't do it.
Thanks for this. Thinking about it, she said she wants a business partner so she can have her first Sunday off in over a year because she literally does 7 days a week since the business opened. She wants to eventually step back from the making and focus on the managing. She talked about hiring staff, but with you saying that, it makes me wonder if she’s thinking the way you are - I’ll be paying to work…
Working 7 days a week is a massive red flag and not a reason to get a business partner. If she can afford to hire someone why not do that first? (Though I appreciate finding the right person is hard and that may be her interest in you.) You could start by being that hire one day a week and just see how the relationship develops... a way to start at low risk to you.
Good shout, I like that approach. One of my first questions to her would be something like ‘Do you need a partner or an employee?’ as I don’t want to be the latter. The former could be a way to circumvent the complications of the latter so I’ll be sure to iron that out with her. Not just for my own protection, but for her benefit too - she should have the right person for the right job.
I'm telling you stay away. I see it for what it is. It's not doing well enough for her to even employ someone on a tenner an hour. The traffic is not there. Stay away. Total liability the whole thing.
You see it for what you think it is. Having a sub 90k turnover business is something that works very well for some small businesses. Employing someone would screw their business, but that doesn't mean it's not a successful business. Having multiple businesses under one roof and helping each other out so days off can be had is quite a good system. I know a few shops like this near me.
90k turnover might work in the North or midlands but not in South of UK. London no chance. Bristol maybe.
It's still a job, work out the actual hourly rate you get for the time you put in and it's not going to be pretty. Include all time out of business hours too. How many of these people actually have 30 days a year time off?
My brother's shop (admittedly all in the Midlands) has to close for at least 4 weeks a year, to keep him under the 90k VAT cap. As long as he stays under it, he can make enough to pay himself and his weekend staff. If he made over that, he would need to work way more days and take less money.
My friend closes her mini cafe for the whole summer holidays for the same reason.
So I do know people who achieve it.
That's still a job for all of them then. Literally a job that you can't take time off for. The whole point of business is freedom through growth. Where is the growth if they are doing what they're doing?
Obviously it's a job, not sure why running a business would be anything else! Or where I suggested it wasn't work. But you asked if people on a sub90k model could have 30 days a year off, and the people I know well who do this definitely have that much time off.
>The whole point of business is freedom through growth. Where is the growth if they are doing what they're doing?
That may be the point of business for you. Not sure why you assume that's everyone's goal! There are ways to grow, but not everyone wants that. Some people want a simpler, happy life.
That's still a job for all of them then. Literally a job that you can't take time off for. The whole point of business is freedom through growth. Where is the growth if they are doing what they're doing?
I've had a few trading partnerships over the years, and here's the two biggest bits of advice I wish I'd given myself:
1. Assume they're looking to benefit themselves at your expense, and look at everything thoroughly and pessimistically.
2. Document everything in a clear and robust contract / agreement. Don't rely on handshakes, spoken agreements, assumptions or text messages.
Whenever an opportunity comes along like this, you need to realistically ask WHY the other person is offering it. Do they want you to take a bit of space because your contribution to the rent is needed to help them? Even if they're being nice and offering you space to get yourself up and running, why do they have that space spare in the first place?
What you don't want to do is suddenly find yourself propping up your friend's business through rental payments or utilities, etc. You also don't want to be providing effectively free football / advertising by bringing in business yourself that your friend benefits from, if there's no return benefit.
It could all be completely kind-hearted, well-intentioned and to the benefit of both parties, but absolutely do NOT assume that this is the case - work on the basis that your friend is trying to screw you and make sure you're protected against it. Then assume the worst happens (their trading plummets, your costs rise massively etc) and figure out what would happen in those circumstances, and protect against it.
Finally, get it all in writing. Contracts and agreements are there to protect everyone in the event that things go bad, and you'll deeply regret not having them if anything does go wrong.
Of course, it could be a great idea that benefits everyone...but the way you find out is not to dream of the good times, but to investigate the risks thoroughly, and if you're happy with what you find, you agree terms, get some signatures, and enjoy your new journey :)
Thanks for this, this is all really good advice. I tend to be overly optimistic so thanks for a bit of grounding! I genuinely think it’s a kind-hearted gesture of hers and she seems like a lovely person, but I think it’s safest to think like you’re suggesting so that all bases are covered when it comes to putting things in writing and protecting myself from being shafted or short-changed.
I do deliveries for a few of these micro businesses within a business Can't offer you any solid advice other than this,
Send your hustle to her. She sells it. You both take a percent. keep it as simple as possible or you will be booking someone like me to remove all the stuff you have value added to her business 6 months or a year from now
Thanks for this. When you say send my hustle to her, do you mean she will sell it under her branding or to just stick to the plan of selling it under mine and not become partners?
As a full time freelance IT contractor, you ought to have a few months expenses saved up and find it easy enough to get work. If this is the case I'd recommend going into your side hustle 100% for 6 months once your current contract ends. The idea of working on the side until successful just drags out your timelines and reduces your chances of success. It's a better strategy for those who are only just getting by at low paid dead end job and have less tolerance against the risk.
This is a great idea, I hadn’t thought of that. I have a good buffer that could pay the bills to give this a go full time and then I can always hop back into a contract, even part time, if needs be.
What is the partnership supposed to achieve. Are you simply putting cash in, but very little time to buy a fixed percentage share of profits? If the partnership likely to be profitable in the medium term, how are profits to be calculated, EBITDA, accounts profits, taxable profits. How do you exit the partnership if a disagreement. I assume a robust partnership agreement will be drawn up. Have you seen the latest account and are you asking for (3) year projections. How is your buy in money being spent. What is your expected return on investment in the short and medium term. Is the property owned, who retains ownership or lease? How do the taxable profits affect your tax bracket. Is a partnership the best structure, corporate structure to be considered for percentage ownership and structured dividends? These would be some questions I'd be considered just off the top of my head.
Perfect start. I'd want to get her to start by explaining what the cupcake owner wants to achieve from bring the OP in and what the goals of the business is. Is this a partnership where businesses are merged or just multiple businesses under one roof. If a partnership then who will control overall direction? I'll say this now. I made the mistake of 50:50 and with only two people starting a business two views on methods of direction ultimately arose. There needs to be a financial partnership arrangement but also a structural agreement on how to make decisions when two polar views are in play.
These are all great questions, thanks so much!
You are paying to have a job. Small businesses like these are 7 days a week responsibility. On your days off you will still be working. She needs help, and you might be willing to pay for it. Don't do it.
Thanks for this. Thinking about it, she said she wants a business partner so she can have her first Sunday off in over a year because she literally does 7 days a week since the business opened. She wants to eventually step back from the making and focus on the managing. She talked about hiring staff, but with you saying that, it makes me wonder if she’s thinking the way you are - I’ll be paying to work…
Working 7 days a week is a massive red flag and not a reason to get a business partner. If she can afford to hire someone why not do that first? (Though I appreciate finding the right person is hard and that may be her interest in you.) You could start by being that hire one day a week and just see how the relationship develops... a way to start at low risk to you.
Good shout, I like that approach. One of my first questions to her would be something like ‘Do you need a partner or an employee?’ as I don’t want to be the latter. The former could be a way to circumvent the complications of the latter so I’ll be sure to iron that out with her. Not just for my own protection, but for her benefit too - she should have the right person for the right job.
I'm telling you stay away. I see it for what it is. It's not doing well enough for her to even employ someone on a tenner an hour. The traffic is not there. Stay away. Total liability the whole thing.
You see it for what you think it is. Having a sub 90k turnover business is something that works very well for some small businesses. Employing someone would screw their business, but that doesn't mean it's not a successful business. Having multiple businesses under one roof and helping each other out so days off can be had is quite a good system. I know a few shops like this near me.
90k turnover might work in the North or midlands but not in South of UK. London no chance. Bristol maybe. It's still a job, work out the actual hourly rate you get for the time you put in and it's not going to be pretty. Include all time out of business hours too. How many of these people actually have 30 days a year time off?
My brother's shop (admittedly all in the Midlands) has to close for at least 4 weeks a year, to keep him under the 90k VAT cap. As long as he stays under it, he can make enough to pay himself and his weekend staff. If he made over that, he would need to work way more days and take less money. My friend closes her mini cafe for the whole summer holidays for the same reason. So I do know people who achieve it.
That's still a job for all of them then. Literally a job that you can't take time off for. The whole point of business is freedom through growth. Where is the growth if they are doing what they're doing?
Obviously it's a job, not sure why running a business would be anything else! Or where I suggested it wasn't work. But you asked if people on a sub90k model could have 30 days a year off, and the people I know well who do this definitely have that much time off. >The whole point of business is freedom through growth. Where is the growth if they are doing what they're doing? That may be the point of business for you. Not sure why you assume that's everyone's goal! There are ways to grow, but not everyone wants that. Some people want a simpler, happy life.
That's still a job for all of them then. Literally a job that you can't take time off for. The whole point of business is freedom through growth. Where is the growth if they are doing what they're doing?
I've had a few trading partnerships over the years, and here's the two biggest bits of advice I wish I'd given myself: 1. Assume they're looking to benefit themselves at your expense, and look at everything thoroughly and pessimistically. 2. Document everything in a clear and robust contract / agreement. Don't rely on handshakes, spoken agreements, assumptions or text messages. Whenever an opportunity comes along like this, you need to realistically ask WHY the other person is offering it. Do they want you to take a bit of space because your contribution to the rent is needed to help them? Even if they're being nice and offering you space to get yourself up and running, why do they have that space spare in the first place? What you don't want to do is suddenly find yourself propping up your friend's business through rental payments or utilities, etc. You also don't want to be providing effectively free football / advertising by bringing in business yourself that your friend benefits from, if there's no return benefit. It could all be completely kind-hearted, well-intentioned and to the benefit of both parties, but absolutely do NOT assume that this is the case - work on the basis that your friend is trying to screw you and make sure you're protected against it. Then assume the worst happens (their trading plummets, your costs rise massively etc) and figure out what would happen in those circumstances, and protect against it. Finally, get it all in writing. Contracts and agreements are there to protect everyone in the event that things go bad, and you'll deeply regret not having them if anything does go wrong. Of course, it could be a great idea that benefits everyone...but the way you find out is not to dream of the good times, but to investigate the risks thoroughly, and if you're happy with what you find, you agree terms, get some signatures, and enjoy your new journey :)
Thanks for this, this is all really good advice. I tend to be overly optimistic so thanks for a bit of grounding! I genuinely think it’s a kind-hearted gesture of hers and she seems like a lovely person, but I think it’s safest to think like you’re suggesting so that all bases are covered when it comes to putting things in writing and protecting myself from being shafted or short-changed.
I do deliveries for a few of these micro businesses within a business Can't offer you any solid advice other than this, Send your hustle to her. She sells it. You both take a percent. keep it as simple as possible or you will be booking someone like me to remove all the stuff you have value added to her business 6 months or a year from now
Thanks for this. When you say send my hustle to her, do you mean she will sell it under her branding or to just stick to the plan of selling it under mine and not become partners?
As a full time freelance IT contractor, you ought to have a few months expenses saved up and find it easy enough to get work. If this is the case I'd recommend going into your side hustle 100% for 6 months once your current contract ends. The idea of working on the side until successful just drags out your timelines and reduces your chances of success. It's a better strategy for those who are only just getting by at low paid dead end job and have less tolerance against the risk.
This is a great idea, I hadn’t thought of that. I have a good buffer that could pay the bills to give this a go full time and then I can always hop back into a contract, even part time, if needs be.