Starting a Business Partnership.....with my Son?

[homeriscool]

Hi all, is starting a partnership with my son a bad idea?

He is a really hard worker and good at what he does.

However, he is out of work for 5 months and can't find a job.

I suggested starting a partnership in a business 50/50

He's very happy about the idea and is very keen to go ahead with it.

We will both invest capital 50 / 50, and earnings will be split 50/50 after expenses and reinvesting in business, etc.

But, after further reading about business partnerships (and working with family), I found that they don't often work out.

Now I'm worried am I making a mistake here?

Am I risking destroying the relationship with my son if we disagree on things in the business?

I'd love your feedback before I go ahead with this.....

 

[fisicx]

The bloke who cleans our wheelie bins works with his son. They seems to get on OK.

A partnership agreement is going to be key to everything as is an exit plan for both of you if it doesn't work out.

@The Resolver is going to be the man to hep with this.

 

[Newchodge]

DON'T.

Seriously a business partnership can be fraught. A business partnership with a family member can be worse. A business partnership with a family member who is in financial difficulty and therefore in need of the partnership far more than you (charity?) is very likely to lead to resentment from one or both of you.

If, after discussing all of this sensibly with your son and considering other options, such as you employing him initially (although that is not a great idea either) you decide to go ahead, you both need a professionally written, watertight agreement, on which both of you get independent legal advice.

Good luck to you both.

 

[Paul Kelly ICHYB]

You can do it and it can be rewarding, however, it has the potential to ruin families.

Especially with father (parent)/child partnerships, there is a tendency where the parent automatically tries to take control due to family dynamics

If you did do it, as mentioned, a partnership agreement is a must.

 

[fantheflames]

Family partnerships can indeed be risky business, as they combine two of the biggest challenges...

Managing a business and maintaining family relationships! However, they can work well if you establish clear boundaries between personal and business relationships.

Perhaps consider a trial period of 12 months before fully committing to the partnership. It's also wise to have regular check-ins to discuss how the arrangement is working for both of you and make adjustments as needed.

The biggest concern I would have is handling disagreements or conflicts in the business. It might be worth discussing potential scenarios and how you'd approach them before making any decisions.

 

[NickGrogan]

I'm in businesses with all three of my sons, and it works very well for everyone.

Businesses always used to be xyz and sons or occasionally xyz and daughters.

If people could work it out 50-100 years ago, why can't you?

 

[Mark T Jones]

As we say in business cliché-land, the closer you are emotionally, the more important it becomes to set things out in a formal & professional manner - culminating in a proper partner/shareholder agreement.

The good thing is you are asking the right questions at the right time. Family businesses have existed and thrived throughout history - they have also failed and caused huge stress. At the least, the detailed discussion you have now will be a good reference point if things get tough, or if you just decide to go separate ways.

 

[homeriscool]

DON'T.

Seriously a business partnership can be fraught. A business partnership with a family member can be worse. A business partnership with a family member who is in financial difficulty and therefore in need of the partnership far more than you (charity?) is very likely to lead to resentment from one or both of you.

If, after discussing all of this sensibly with your son and considering other options, such as you employing him initially (although that is not a great idea either) you decide to go ahead, you both need a professionally written, watertight agreement, on which both of you get independent legal advice.

Good luck to you both.

This is my biggest fear.

 

[Newchodge]

This is my biggest fear.

Then talk it through, in great detail, and listen to what each of you says.

My husband worked with his father for some years. One of their rules was that, at work, he was called 'John', not Dad. Their biggest issue was establishing equality because Dad laid down the law at home ....

 

[Lisa Thomas]

You have mentioned he's good at what he does, so is the business going to be based on his skills? Do you have any experience in the type of business you are both proposing to work in?

Do you have any experience in running a business?

What do you do currently?

 

[HFE Signs]

There is no right or wrong, my advice would be that one of you should have the final say 60/40 might work better.

 

[DontAsk]

Do you mean a partnership or a Ltd company with both of you as shareholders and directors?

Do you need the money? Does it need both of you? If it's a viable business idea, have you thought of him setting up a Ltd with you as a shareholder and financial backer?

 

[homeriscool]

You have mentioned he's good at what he does, so is the business going to be based on his skills? Do you have any experience in the type of business you are both proposing to work in?

Do you have any experience in running a business?

What do you do currently?

Hi, thanks for your input. Yes I have experience in what he does (more than my son) but I switched careers years ago as I enjoy it a lot more ( SEO, marketing, lead generation etc) I already have my own business. I would be doing all of the marketing, he would be out on the road.

My biggest fear is putting all the work in, and we don't get along in business. It seems common and it could ruin our relationship (something I never thought about)

 

[homeriscool]

Do you mean a partnership or a Ltd company with both of you as shareholders and directors?

Do you need the money? Does it need both of you? If it's a viable business idea, have you thought of him setting up a Ltd with you as a shareholder and financial backer?

Hi, it would be a partnership. I don't need the money. Your idea seems like a good one. A LTD company with me as a shareholder and financial backer.

 

[Lisa Thomas]

It could work, but will need proper paperwork to back up the legal entity and an open and honest discussion an what you expect from each other and all the risks if it goes wrong. You will want a business plan and cashflow forecasts with regular reviews.

I guess you won't know until you try but ensure you have everything in place for if it goes wrong.

Make sure you both go into it with your eyes open.

Good luck!

 

[MyAccountantOnline]

Hi all, is starting a partnership with my son a bad idea?

He is a really hard worker and good at what he does.

However, he is out of work for 5 months and can't find a job.

I suggested starting a partnership in a business 50/50

He's very happy about the idea and is very keen to go ahead with it.

We will both invest capital 50 / 50, and earnings will be split 50/50 after expenses and reinvesting in business, etc.

But, after further reading about business partnerships (and working with family), I found that they don't often work out.

Now I'm worried am I making a mistake here?

Am I risking destroying the relationship with my son if we disagree on things in the business?

I'd love your feedback before I go ahead with this.....

As an accountant I've sadly seen so many family and friends set up in business together, for it to go wrong and for relationships to be ruined. In my experience it's often disputes on the amount of effort and work each is doing.

You say you will split everything 50:50 - will that include all of the work you do?

If you dont need the money what's the motivation to set up the business?

Would it perhaps be best to help your son set up his own business?

 

[Chris Ashdown]

I had my son and wife employed by my company for 13 odd years, the company was 100% mine but I paid them both far higher than any other staff. Not once did either of them mention partnership or shares in the company and we all remained friends to this day, when it came holiday time we just left my son in charge. they both new that if anything happened to me they would own the company. I think it's far better to have one Captain that 2. Myson acted as General manager and my wife as accounts

 

[MOIC]

Would it perhaps be best to help your son set up his own business?

I would second this.

 

[Lisa Thomas]

It's definitely an option. OP could perhaps just be a shareholder, or an investor. Consider getting security for any loans...

 

[homeriscool]

As an accountant I've sadly seen so many family and friends set up in business together, for it to go wrong and for relationships to be ruined. In my experience it's often disputes on the amount of effort and work each is doing.

Hi, thanks for your answer. This is what I fear the most. Falling out. Do you think its better to not work with family and friends at all? I have to admit, most of what I've read about it so far is negative.

You say you will split everything 50:50 - will that include all of the work you do?

Yes I will / was going to split all the work I do (which is generating all of the business).

If you dont need the money what's the motivation to set up the business?

Because my son enjoys his work but can't seem to find a job vacancy. He's more interested in working for himself. However, he knows nothing about marketing, SEO, PPC etc. He's my son and I wanted to try and help him. However, after looking more into it.....this might not be such a good idea after all. I've told him to go it alone and do it on his own, but he doesn't want to. (or not confident yet)

Would it perhaps be best to help your son set up his own business?

yes probably, but he doesn't seem to like that idea....

 

[tony84]

I worked with my mum, it put a strain on us.
But in fairness, we are both very strong minded and ultimately whilst I always described it as we worked together, she actually worked for me. Which put a very different dynamic on what was the norm growing up.

I think you need to have a frank conversation upfront about who makes the decisions if you disagree. It might be that you are in charge of certain areas or one person runs things (lead generating, marketing, accounts etc, whilst the other goes and does the jobs), in which case you will rarely overlap.

One thing I always do now before entering into an agreement, is to discuss what happens if something goes wrong and it does not work out. Get the rubbish side out of the way at the beggining when everyone is ful of enthusiasm rather than resentment haha.

I think it can work, but 50/50 does make it a case of who is actually in charge when you disagree.

 

[homeriscool]

I worked with my mum, it put a strain on us.
But in fairness, we are both very strong minded and ultimately whilst I always described it as we worked together, she actually worked for me. Which put a very different dynamic on what was the norm growing up.

I think you need to have a frank conversation upfront about who makes the decisions if you disagree. It might be that you are in charge of certain areas or one person runs things (lead generating, marketing, accounts etc, whilst the other goes and does the jobs), in which case you will rarely overlap.

One thing I always do now before entering into an agreement, is to discuss what happens if something goes wrong and it does not work out. Get the rubbish side out of the way at the beggining when everyone is ful of enthusiasm rather than resentment haha.

I think it can work, but 50/50 does make it a case of who is actually in charge when you disagree.

Hi Tony, thanks for your input. I can imagine how difficult your situation was. good idea about getting the rubbish stuff out of the way first.

 

[Lucan Unlordly]

I think there's a lot more information needed about your son, his age, his ambitions, you, the type of business, the investment required etc.,

If it's an old school Butcher's where your working under each others feet all day it's likely to be difficult.
If it's a Courier Delivery type business where your both out in separate Vans all day it could work.

 

[Lisa Thomas]

"yes probably, but he doesn't seem to like that idea...."

Ultimately this is your son's problem to solve (although I appreciate how you will naturally want to help him).

It doesn't sound like he has the motivation needed to get involved with his own business (but that's understandable as its scary for anyone, let alone someone who is young and inexperienced). Maybe that's the sign to say he would rather simply be an employee for someone else. Perhaps he doesn't have the appetite needed to go into business with you.

He could start trading himself, and simply outsource the marketing work to you as a supplier. That tales the pressure off you from getting too heavily involved in the business and would force him to run the business himself but perhaps this is not an attractive proposition to him.

 

[homeriscool]

"yes probably, but he doesn't seem to like that idea...."

Ultimately this is your son's problem to solve (although I appreciate how you will naturally want to help him).

1000% agree with you here. Maybe I'm trying to too much for him here.

It doesn't sound like he has the motivation needed to get involved with his own business (but that's understandable as its scary for anyone, let alone someone who is young and inexperienced). Maybe that's the sign to say he would rather simply be an employee for someone else. Perhaps he doesn't have the appetite needed to go into business with you.

I spoke to him last night and said it might be better if he set it up on his own and I will just help him (do the marketing side of things and invoice his business). He's got money saved but doesn't want to use it all (he's shrewd about how much he's got saved, too), but if he could afford to do it himself....he doesn't need my financial backing. Business is a gamble for anyone.....

He could start trading himself, and simply outsource the marketing work to you as a supplier. That tales the pressure off you from getting too heavily involved in the business and would force him to run the business himself but perhaps this is not an attractive proposition to him.

Very good advice here Lisa, thank you for taking the time to share your views. I've taken what you've said on board and I think your right.

 

[homeriscool]

I think there's a lot more information needed about your son, his age, his ambitions, you, the type of business, the investment required etc.,

If it's an old school Butcher's where your working under each others feet all day it's likely to be difficult.
If it's a Courier Delivery type business where your both out in separate Vans all day it could work.

It would be or *would of been* my son out on the road doing service work / maintenance. But, maybe me being too involved isn't such a good idea. In fact, now I think it's a bad idea

 

[Gyumri]

Am I risking destroying the relationship with my son if we disagree on things in the business?

Yes - and even if you don't disagree your relationship will be affected.

Hi, thanks for your answer. This is what I fear the most. Falling out. Do you think its better to not work with family and friends at all? I have to admit, most of what I've read about it so far is negative.

Yes - don't get friends or relatives involved.

 

[homeriscool]

Yes - and even if you don't disagree your relationship will be affected.


Yes - don't get friends or relatives involved.

Good advice - I think you (and many others) are right! Thank you

 

[Socio South West]

Been there... done that... and got a STACK of dirty, torn, bloody t-shirts.... and a family of four split four ways. (I was the one left to clear up the messes as the other three bailed out for various reasons one by one)

I'm not saying don't - as there are many successful family businesses, but each of you must take independent advice on anything to do with the business and not let the naturally senior partners dominate. Even that won't prevent potential conflict: It all depends on the family dynamic within your unit.

I have to say that the reasons you give for wanting to do this and your subsequent comments do not fill me with confidence that this would succeed I'm afraid.

 

[homeriscool]

Been there... done that... and got a STACK of dirty, torn, bloody t-shirts.... and a family of four split four ways. (I was the one left to clear up the messes as the other three bailed out for various reasons one by one)

I'm not saying don't - as there are many successful family businesses, but each of you must take independent advice on anything to do with the business and not let the naturally senior partners dominate. Even that won't prevent potential conflict: It all depends on the family dynamic within your unit.

I have to say that the reasons you give for wanting to do this and your subsequent comments do not fill me with confidence that this would succeed I'm afraid.

Thanks for your input. I can only imagine how bad things could get. You sound like you've been through hell with this. I think the skills and personality of each family member must be taken into account, something I haven't properly considered until now.

Even looking at my own reasons for wanting to do this - it's to help my son, which in reality probably isn't a good idea. I want him to stand on his own two feet.

Business is tough, and he needs to learn that.

And maybe he needs to earn his way to being the owner of a business rather than me doing it all for him.

I've learned a lot from this thread. Thanks to you all.

 

[fisicx]

The idea to let him decided what sort of business he wants to run and you fund the startup is a good one. He then takes total responsibility for how well it does. You can advise and agree how he pays back any loans but it means you can step back and reduce the chances of a family bust up.

You could then contract out the servicing/maintenance to him - but this could cause issues when you get customer complaints or he doesn't feel like working today.

Or just tell him to stack shelves in Aldi, get a job in a pub, ocado delivery driver or wherever. Don't know where you are but there are always loads of vacancies round here.

 

[homeriscool]

The idea to let him decided what sort of business he wants to run and you fund the startup is a good one. He then takes total responsibility for how well it does. You can advise and agree how he pays back any loans but it means you can step back and reduce the chances of a family bust up.

You could then contract out the servicing/maintenance to him - but this could cause issues when you get customer complaints or he doesn't feel like working today.

Or just tell him to stack shelves in Aldi, get a job in a pub, ocado delivery driver or wherever. Don't know where you are but there are always loads of vacancies round here.

Thanks again for your input. It is appreciated. I agree, he needs to be responsible for the success or failure of the business. If he doesn't want that, then, like you say, he can stack shelves in Aldi or get a delivery driving job or something.

 

[Mark James]

I would second this.

Out of Interest son how’s your sons food businesses going?

 

[FriendsInvest]

Hi all, is starting a partnership with my son a bad idea?

He is a really hard worker and good at what he does.

However, he is out of work for 5 months and can't find a job.

I suggested starting a partnership in a business 50/50

He's very happy about the idea and is very keen to go ahead with it.

We will both invest capital 50 / 50, and earnings will be split 50/50 after expenses and reinvesting in business, etc.

But, after further reading about business partnerships (and working with family), I found that they don't often work out.

Now I'm worried am I making a mistake here?

Am I risking destroying the relationship with my son if we disagree on things in the business?

I'd love your feedback before I go ahead with this.....

Hey!

First-time replier but i would say the number one reason family businesses may fail is due to lack of communication, especially at the start but also during the lifecycle of the business.

As others have pointed out - getting it all documented is key, this coming from a former commercial lawyer!

Make sure what you document covers what you mentioned but more importantly covers scenarios and asks questions in a way that no stone is unturned. This way you avoid opinionating on what should be done and you can use such a document as a guideline.

But the reality is that businesses evolve and how relevant or updated such a document is may decrease over time so you should ensure you check in with your son and update the document every 6 months or so to reflect the latest.

And I've always advised my clients to insert responsibilities and clear milestones to ensure that the 50% they get is earned/incentivised rather than just given.

Hope it goes well!

P.S. I've built a whatsapp tool on friendsinvest.co.uk that helps people like yourself in asking, negotiating and creating simple to use contracts.

Check it out or ping me a message for more details!