Business Partner Questions....

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LazyD

LazyD

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Dec 7, 2006
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Wine Cuntry
wildfoxmedia.com
Currently I work at a 9-5 doing web app development/web design.

A couple co workers and I have talked about breaking off of the current company and starting our own web dev company.

As it stands, I would be the programmer/developer, one of the other 2 guys is a graphics/flash guy with some project management skills and the last guy knows a little HTML and primarily handles client contact and sending newsletters, etc.

That means, that myself, and the graphics guy would be doing the majority of the work and I would be doing more work then both of them for each project.

My problem is this.... Handling money issues... The graphics guy will certainly earn his keep doing graphics, flash, etc.

But the client contact guy in my opinion doesn't deserve as much as myself or the graphics guy considering he handles client contact when they contact him and quiet honestly that's not even 25% of the amount of work im going to be doing. How do I tell the client contact guy who says we can split profits in 3rds that he isnt going to get that much if we do decide to into business. Unfortunately he is a friend its not just a matter of business at this point.

Am I being stupid? Does he deserve as much as programmer or graphic designer? Any tips on dealing with the issue?
 


Get him to earn his 1/3 by giving him more responsibility. Is he capable of going out and getting you new clients? If he can bring in business, that should help justify the pay, as long as he brings in enough business
 
Work by yourself and avoid "biz partners" head aches ... saves you trouble in the long run.
 
nacho, at this point im doing decent on bagging freelance work myself. Granted, im not able to go out and actively look for more work, WFers, offline people and other stuff keep me busy.

medicalhumor, I tried to hint at him learning PHP, flash or something that he has some interest in and I think he knew what I was trying to say and he got a little defensive about it. Maybe ill try to mention it again.
 
If you're already having second thoughts, don't do it. Period. Those feelings will only deepen and fester as time goes on and you don't see him pulling his weight.

The only way you should ever get into a partnership is if everyone is "on board" and feels good about the situation.

Think of it like marriage. If you have any doubts, don't fucking do it.
 
If he can bring in literally DOZENS of clients, yeah, he might be worth partnering with.

If he can't, he won't be pulling his weight.

::emp::
 
If he can do biz dev and handle client management and expectations. That's a pretty huge amount of work and roll in outsourcing and managing that, if he can actually do it.

If you can't justify that then you aren't thinking about scaling your business in the future, it sounds like it will create resentment all round if you go down this path (just from your wording). Look at it from his perspective, he's doing a full-time job, just like you and now you want him to form a company with a reduced backend because you feel his job isn't as critical as yours, whoops ;)

I would advise against this and forcing your friend to learn something just to make you feel better about giving him 1/3 of the business he'll be a co-founder in, well, I know what my response would be.

Bottom line, if everyone is "working" full time, then they should get their fair share of the business.
 
At this point, he doesnt bring in clients, he doesnt do sales, he is the point of contact for existing clients and basically listens to what they have to say then has one of us fix it.

If he were making sales and bringing in new clients it would be one thing, but hes not. In a given day he has quiet a bit of time to read 4Chan and Fark between clients calling.
 
Here's my personal experience... Stay away from partners, very very seldom do they actually work out.

I run my own logo design / web design business. If you know how to build sites / design, the only other thing you need to do is get clients. You do that by first establishing a website with a portfolio and pricing that is consistent with the work inside the portfolio (to get clients quicker, offer cheaper than normal pricing for the work you provide).. Also, setup a payment system so clients can order on your site, and a backend for handling them.

Then the second step, is getting the traffic. There are a ton of ways to do this.. the obvious is messageboard advertising - start a launch contest and offer a free design. Do a good job on it and this will get the word out..

Other ways of getting traffic, write a few AWESOME tutorials, they'll get passed around, and SEO orient those tutorials. I rank high for keywords like "how to design a logo" and "website design tutorial". I get most of my clients from the SE's...

The past year, I've received 400 logo design orders. Just go at it alone man, I've been in partnerships before... Do the work yourself and take all the money.

:)
 
dreamache said:
Here's my personal experience... Stay away from partners, very very seldom do they actually work out.

I run my own logo design / web design business. If you know how to build sites / design, the only other thing you need to do is get clients. You do that by first establishing a website with a portfolio and pricing that is consistent with the work inside the portfolio (to get clients quicker, offer cheaper than normal pricing for the work you provide).. Also, setup a payment system so clients can order on your site, and a backend for handling them.

Then the second step, is getting the traffic. There are a ton of ways to do this.. the obvious is messageboard advertising - start a launch contest and offer a free design. Do a good job on it and this will get the word out..

Other ways of getting traffic, write a few AWESOME tutorials, they'll get passed around, and SEO orient those tutorials. I rank high for keywords like "how to design a logo" and "website design tutorial". I get most of my clients from the SE's...

The past year, I've received 400 logo design orders. Just go at it alone man, I've been in partnerships before... Do the work yourself and take all the money.

:)
Click to expand...

Excellent post, put out a few design tutorials and go it alone, heck you can do it from your bedroom if needs be - partnerships just add friction and difficulties to a simple concept.
 
dreamache - I agree with you on all points

Ive never had much of an issue with going it alone but decided that I would think about doing a partnership, as you and many others have mentioned it seems to add nothing more complexity without much gain in return.

My biggest issue at this point has been getting clients but I guess I just need to try harder.

Thanks all - I be going it alone..
 
LazyD said:
dreamache - I agree with you on all points

Ive never had much of an issue with going it alone but decided that I would think about doing a partnership, as you and many others have mentioned it seems to add nothing more complexity without much gain in return.

My biggest issue at this point has been getting clients but I guess I just need to try harder.

Thanks all - I be going it alone..
Click to expand...

Firstly look at local SEO, its quite easy to get your business listed top locally within a few weeks on Google.

This is a great building block and has proved to be the vital cog in running a profitable design business for me.

Then look at innovative marketing, something nobody has done in your area, just take a look around and see where other businesses are losing clients and take advantage.

And most of all - keep motivated, stop sitting around and just do it!
 
Wanted to put in my 2c before you make the decision.

I do it alone, it's mostly a good thing but often times it sucks.

Here's what I suggest, split it up evenly and give that guy secretarial duties. Basically he'll be the 1st line of defense and you won't have to deal with idiot customers. Some job descriptions can include 1> receiving all phone calls 2> decipher what exactly the customer wants 3> if programming or graphic arts, get exactly what the customer wants and pass the specifics on to you guys 4> update text on website as per customer's specs (that's just busy work that will end up pissing you off) 5> paperwork pushing!!! 6> email/server upkeep/maintenance

I'm sure you can find more stuff like keyword research, niche brainstorming (for in-house work), ad rotation/optimization & checking up on the SERPS

If he wants the job, make him work his ass off if he's not skilled ... he can end up as a tremendous asset for your new company if the proper job description is worked out before hand. Wait until after the formation to dump the extra work on him and you'll end up screwing yourself.

In the end, you can create a well oiled machine that will allow you to do the required work in 1/10 of the time instead of banging out a project in a week by yourself. More time = more in-house projects = more residual income

BTW: Hire another programmer asap ... you are carrying most of the work on your shoulders and in the workforce, you would demand a larger salary that the other two. Another hack will fix that problem and allow for insane growth during downtime

Also, your flash/graphics guy does your css stuff also ... right??? If not, he's the 1st that needs to go as that stuff is a dime a dozen. A helpful/friendly secretary type that understands the business is a tremendous asset.

As far as making sales, I'd just form business partnerships with companies that already have existing relationships with businesses in your area. Just look under business resources or printing (not printers) in the yellow pages. Each of these companies can push you several accounts monthly and will seldomly have an in-house developer for websites. Just charge them and let them deal with billing/collecting from the actual customer. They will also become a liaison for you since they know their customers best.
 
Start your own business and just hire those guys as at-will employees. Compensate them well for whatever they do bring to the table.

Or split the "profits" evenly, pay yourself ( and whatever partner is more valuable) a higher salary than the less valuable partner, with the goal of never actually making a profit.
 
LazyD, I don't know you or any of the other partners, but I'd lay $100 on the fact this partnership will fail within 2 years. I'm sure you're all great people, but the odds are strongly stacked against you, and if you have ANY doubts now, you're already in trouble.

I can also tell you now that your client contact guy will be useless to you. Unless he's a proper salesman who brings in business, he's not worth the money. And if he was a proper salesman, he'd probably be demanding 50% of the business. The person who hold the client relationships in a business holds the power; the only exception is if you have a really clever technical product that only one coder understands, then they have a fair chunk of power.

I've worked in several partnerships over the last 10 years. Most of them have been unsuccessful, and one was very expensive to extricate myself from.

Now, that could be because I'm a difficult person to work with, but almost all of my colleagues have had the same problem at one time or another.

Making someone an equity partner (ie them owning part of your business) in a business that you are serious about is as big a commitment as marrying them.

If it goes wrong, the resulting sour relationship will drag down your life for at least 12 months whilst you work out an exit.

I have a simple test for whether or not to go into partnership with someone; ask myself "is it totally and completely impossible for me to go into business without this person?".

If you come to the conclusion that it is, go to a successful business person that you know and trust, and try to persuade them that it is a good idea, from an outsider's perspective as well. Let them talk you out of it.

If you're still convinced, agree to work with this person on a project by project basis for 6 months and see how you work together. If you still really want to do it after that, you may be ok.

That's not to say you shouldn't work with other people. I would just only go into an equity partnership if it was the only possible option available to me.

If I were in your position, I'd network really widely to find other a few other skilled people, and form close working relationships where you refer work back and forth, and collaborate on individual projects.

Handle the client stuff yourself, and teach yourself good sales/customer service skills. That way you'll massively increase your own earning potential. One you have more clients, hire a good Virtual Assistant to help with taking calls etc.

If you're not self-reliant and motivated enough to make it alone in business, I'd stick with employment and doing work on the side until you are. If you want the "social" benefits of working with other people, just meet a few other self employed people you get on with and get together in an office once a week to work or something like that.
 
I do all three in my business, and the client side is the most difficult and time consuming. There's a lot more to handling clients than people might imagine.

You should watch what your partner does very closely for a few days, and you might realise that he works just as hard as yourself and the designer.
 
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