Is 50-50 partnership a good idea? Need your advice..

**srini28** · 07-31-2008 01:28 PM

I have been working for a client for the past year or so and have great trust in him. He has always kept his share of the deal and paid me on time. I am a relatively new entrepreneur and have never partnered with anyone else to start a business.

Recently, during a discussion, we got the idea about developing and selling a certain kind of website. He suggested that we do this together and I assume he means a 50-50 partnership. I haven't gone into the partnership details with him on this yet. The idea is that I will develop the website, maintain it, SEO/market it and provide the customers with monthly reports, etc. while he will find the customers using his sales people.

I like the idea very much and trust him too. But what irks me is that I feel like I am doing most of the work, and throretically, I could actually hire the sales people myself and do this on my own. However, in practice, I am so busy that I know I will never get to it unless I am partnering with someone, which sort of establishes a commitment on my part. The other benefit is that I don't have any relationships with sales people and will have to find and hire new ones while he already has people that he has been working with for a long time so it will be easier to get the idea going if he does the sales portion.

Also, another way to look at it is that he could hire someone to do the web development and maintenance for him too and do this on his own to keep the thing to himself instead of sharing 50% of the profits with me. But he wants to do this with me and does not seem to think that way.

What do you guys think? Should I go with the 50-50 partnership or should I wait and try to do this on my own?

Thanks in advance for your time. Your advice is valuable to me.

Srini

**Gaulkin** · 07-31-2008 02:08 PM

Its always better to have full ownership and hire a person then to do a partnership, especially if it goes to court.

**rogercbryan** · 07-31-2008 02:34 PM

If you can not do it on your own and you can not afford to hire someone.. then a partnership is your only option.. 100% of zero is still zero!

**JLeezer** · 07-31-2008 02:36 PM

If you become intent on forming a partnership, I would strongly suggest making it 51-49, not 50-50. Giving one person the ability to make a final call on something may save the partnership (but only if the person with the 49% share is 100% committed to the entire operation and the decisions of the majority partner).

**BusinessAdviser** · 07-31-2008 02:42 PM

Originally Posted by Gaulkin

Its always better to have full ownership and hire a person then to do a partnership, especially if it goes to court.

By better, you mean for the person with full ownership, generally. But for the employee???

**BusinessAdviser** · 07-31-2008 02:45 PM

Originally Posted by rogercbryan

If you can not do it on your own and you can not afford to hire someone.. then a partnership is your only option.. 100% of zero is still zero!

Not true. Full ownership by one with an agreement for a percentage of profits for the other, maybe?!

**BusinessAdviser** · 07-31-2008 02:47 PM

Originally Posted by JLeezer

If you become intent on forming a partnership, I would strongly suggest making it 51-49, not 50-50. Giving one person the ability to make a final call on something may save the partnership (but only if the person with the 49% share is 100% committed to the entire operation and the decisions of the majority partner).

And how do you recommend the OP decide on the 51-49? Convince the other partner to give up complete control (for all purposes, since one has a controlling interest over the other)? Give up complete control himself? It's a nice idea, but not very practical.

**iMediaPro** · 07-31-2008 02:58 PM

Bottome line..you each bring something to the table the other one needs. In a partnership the work is not always split evenly. Especially if what YOU bring to the table requires more manual labor.
Weigh your options. See if you have the discipline (the key word being "discipline") to take on this project all by yourself. If you don't, go for it. Put together a sound contract that both must adhere to.
All I can say is don't let a good idea fall by the wayside. Someone else is bound to come right behind you and take it on. Then you'll never have the ability to recapture that opportunity.

**veikoh** · 07-31-2008 04:24 PM

Im looking only equal partnerships because doing something alone doesnt help me at all. So if we have two persons willing to risk, there is 50/50 deal, when three then each are 1/3 as equal partners. Business is risk and dedication, so it must be shared.
When it becomes financial participation, then either its financial investor willing to invest up to 49% (because you are the key to success) or takeover when you sell your idea/product/market to someone still having the minority of ownership.

**srini28** · 07-31-2008 04:43 PM

Thanks a lot for your replies. It's amazing that so many of you helped in such short notice.

I appreciate all your advice. iMediaPro's note seems very apt for my situation.

I am considering the following route. The business we are considering is lucrative since the sales are periodic. Customer acquisition is hopefully only a one-time sales effort. So if my partner is responsible for the sales work upfront, after the first couple of months, he really would not have any work to do while I maintain, generate traffic to the sites and provide reports.

We are talking about a pretty small start. The initial investment is around $2K and about $800/month thereafter for each site (not including my personal time). If it works out, we could be doing this for multiple sites and the investment for each site is expected to be about the same as above. Hence I am thinking that perhaps my partner should put in the money while I put in my work, that way there is equality. For me, the benefit is that he is taking on all the risk since he will be putting in the money. For him, the benefit is that I can create our product much better than he can and on top of that, if it is successful, he literally has no work to do and reap the rewards. That sounds a bit more fair to me.

But even then, I am still debating whether to start taking this seriously enough to do it all by myself and avoid the whole possibility of partnership conflict.

**chrispalko** · 07-31-2008 08:21 PM

I didn't bother to read the whole post, nor the replies, but in my experience and from what I've seen, partnerships are not a good way to go.

Sure there have been successes, but from what I know, it's not a good idea, do it on your own and avoid having issues down the road.

Think about it like this, how much would you make if you did go with a 50/50 partnership. Double that and that's how much you'll make on your own.

How much stress will you have with a partner. Halve that and that's what you'll have on your own.

Yes, a business is stressful regardless, but imagine having to worry about yourself, your business, and your partner's decisions.

Good luck regardless of which route you take.

**spawn** · 08-06-2008 09:22 PM

before you think about what you can give them.. think what they are giving you.
what do you have and what are they bringing in.

if they dont match then you dont have a equal partnership.
you can still be a 100% owner of your corporation but still have a 50% profit sharing partnership. this is different. any legal counselors here??

**ron komorowski** · 08-06-2008 10:02 PM

Steve Jobs and Steve Wozniak....Bill Gates and Paul Allen...Thomas Edison and J.P. Morgan...it can work sometimes...most time it doesn't...but it can work well while it lasts as you could inspire and motivate each other...a little inside competition keeps you both rolling faster sometimes too!

Ron Komorowski
Inventor of Handi-Straps
Handi Straps Lifting System Home

**srini28** · 10-16-2008 11:43 AM

Thanks all of you for your ideas. Just so you know, I decided not to get into a 50-50 partnership at all. I decided that the most I would go is to work with someone at a level where decisions are not shared. For istance, one person could be the "funding partner" or an advisor or almost a customer per-se, where in you work together to leverage each other's resources and share expenses but do your own thing. Like 2 lawyers sharing an office is a small example.

Thanks a lot for your insight..

**BMX** · 10-16-2008 12:30 PM

Originally Posted by iMediaPro

Bottome line..you each bring something to the table the other one needs. In a partnership the work is not always split evenly. Especially if what YOU bring to the table requires more manual labor.
Weigh your options. See if you have the discipline (the key word being "discipline") to take on this project all by yourself. If you don't, go for it. Put together a sound contract that both must adhere to.
All I can say is don't let a good idea fall by the wayside. Someone else is bound to come right behind you and take it on. Then you'll never have the ability to recapture that opportunity.

This is true.