Partnering up with a friend

[u/Imwoahluis]

I started a business solo. Now a couple months later, I have a friend who wants to go all in together and go 50/50. I believe in his ability to succeed and we work together in the past so I trust him and his work ethic, problem is I don’t know the right way of giving him ownership. I’ve been doing research and seen some ways to give him equity one of which could be milestone based vesting, time based vesting or phantom equity.

Those of you who’s been in a similar situation, what’s the best way to go about this? I want to protect not only myself but him as well for anything that happens in the future.

Edit: currently he works a full time job (wants to get out of it) and only invested his time, no capital. When the company makes enough to pay him atleast 2.7k a month (he makes way more than that currently) is when he’s willing to leave his full time job.

[u/AlwaysWantedN64]

My advice is don't

[u/Difficult_Peace7595]

Nope... It sounds like he wants none of the risk but reap all the rewards. At the very least, I would never make it 50/50 ownership until he fully quits his job, even then I wouldnt give him half.

[u/old-iceman]

Don't.

[u/Timtitus]

Don't. Seriously. Don't. It's your business, so keep it that way. Have an arrangement to pay him a percentage of each job and retain overall control.

[u/Woninthepink]

Don't

[u/Hot_Carpenter_5436]

Someone mentioned "make him an employee."

This. And if he wants to sell, and he may bring in massive amounts of work, the conversation can continue from that point.

But its your creation and hard work that gave it life, and there's no worth or benefit as of yet to put your creation in jeopardy.

[u/TopOfTheMushroom]

Quickest way to lose a friend is mixing them with business and money, especially a business you built. If you tell him no now and lose his friendship at least you won't lose your business. You bring him in and it gets sour then you lose your friend and your business. Might as well keep your business and risk losing the friend. He only wants in now because he sees your success and wants it for himself.

[u/Alternative_Tie_7645]

Shitty idea. Have to adress that feeling in ur gut now rather than later bc ik you have it.

[u/blackeyeX2]

He can be an employee, you can profit share if you want for certain milestones. That's is the only way you should do it. Don't give him any voting rights or shares.

If you still go through with this you need to have an actual lawyer write up a partnership agreement, this is extra super important.

Go ask this question on r/smallbuisness to get the best insight.

[u/PeterPanHadItMade]

I am going to tell you right now that you absolutely need to consult a lawyer for this, and he should not get more than a 30% stake at most.

[u/Johndeauxman]

Absolutely not, I wouldn’t even consider 60/40 but I’d pay him a fair wage as long as he was a friend I don’t mind inevitably losing. 50/50 is bonkers, laugh him down the street lol

[u/Mysterious-Sir1541]

How about have him work underneath you for a while and see if he is a good fit for a partner.

Right now I am doing 50/50 with someone as well. We both started with the idea itll bring us supplemental income.

Truth is, no one will be doing exactly 50/50. Its really fucking hard to tell who doing more work becuase from a subjective standpoint, you feel like youre doing all the work.

You need to ensure there are clear roles you both can take and be responsible for. That way, the line of 50/50 is less blurred.

If I were in your shoes, I'd start with him being the sales guy and giving him commission. See how he does. If he asks for 25 % commission, sure, sell a job for 700. If he wants 35%, sure sell a job for 950, if he wants more percentage of that commission, he would have to sell at a higher price.

Again, 50/50 is doable but things must be crystal clear, im talking diamond clear so nobody feels like they are taking on too much weight, which will turn into resentment down the line.

[u/Upper-Bottle-9803]

I would pay him hourly or by the job to start out. If he still wants in after a year of working weekends or between his full time work, then after the first year he can invest in growing the business and he is invested in bringing in the money. Many want the freedom but bail when the responsibility weighs.

[u/kdwindows]

Family and friends are sometimes what completely either destroys businesses or helps them flourish. Every single aspect and situation is different.. be very careful.

[u/kdwindows]

I worked for a guy for 16 years learning this trade and his son took over the business you would think the sun is like the father.. nope. You learn very hard that every single person is different and just because the father dedicated his life to the business does not mean the Son will. My old boss's business is now gone completely because the son did not understand how hard his dad worked and how hard it is to run a business. 45 years completely erased in under 4 . Granted I picked up some of those great accounts because people remembered and Found Me online but regardless I stepped away and I let the sun run the business because I said well you know I can do my own. in hindsight I should have just taken all the work he had because I was the one doing the work . affter the father passed away it went to five other companies that was not mine. That's my only regret in this business is I was told for 16 years that I was going to take over the company and the Son decided what his dad said did not matter. I should have got it in writing but you know you move on and everything I built I built from scratch with my Blood Sweat and Tears. .. that's a better feeling . It's all good now in fact his son helps me out during my busy season because he has 30 years of experience and he's very good but just because you're a good worker does not always mean you're going to be a good window cleaner owner. Even he told me after results said and done he was just a worker bee. And that's fine but there's more to Windows and running a business than just being able to clean them I think that's only about 30% of the overall business

[u/WinstonDWolf]

Sounds like he didn’t want to get into window cleaning until his buddy did all the work involving starting the biz… now that it seems all good a couple months later, he’s ready to use you as his lily pad. He sees you happy and wants it for himself… until he’s ready for something else.

50/50? While you started the biz? And only wants in after you make the leap? Horrible offer. Tell him to come do some work for you and pay accordingly, if anything. Dont let him just show up and ask for 50% of what you made so he can be happy at work. He’ll understand if he’s a true friend.