Partnership split suggestions.

[jinjabred]

Hey everyone,

 

This is my first post on this forum. I hop on here occasionally to get ideas for my business. I've run into a slight problem with my business and thought I would see if anyone on here had any recommendations. Just a little background information: This is a family owned and operated business. It was started in 1960 by my grandfather. My father inherited the business back in the early 90's (I believe). We hit hard times in the recession, and were able to tough it out. My brother and I had been employed there for the previous 13 years. 2 years ago my brother and I took ownership of the business as 50/50 partners.

 

The past 2 years have been a learning experience. My dad owns the property and we are renting the property for a very high amount. We're probably paying 2.5 times what the property is worth, but we have a running business for that (including shop equipment & previous clientele). It has been my brother and I doing everything for the past year. We both handle our own estimates, customers, and parts ordering. I have been handling bills, taxes, and probably 75% of office/management responsibilities. We have occasional spats, but last week it came to a head.

 

My brother is an awesome technician! He can handle small to large jobs with ease. He is constantly pulling motors, doing 1 ton 4wd transmission jobs, head jobs on northstar engines, you get the point. All the big stuff. I can do pretty much anything as well, but I definitely don't get as many hours because of office responsibilities.

So enough of that I'm looking to make the business more profitable, and basically am gridlocked because my partner has not been wanting to hire a secretary or technician. He has very high standards and no one seems to meet them. So we got into a fight because of personal stress issues on his end and business stress issues on my end. I want to fix this problem as we are brothers and don't want to see this come between us. My brother wants to liquidate the business, which at this point wouldn't benefit either of us from my point of view. I told him that I would like to do a 51/49 partnership so that we could move the business forward and this was a huge insult to him because he thinks I'm wanting to go on a power trip or something.

 

So tonight I was trying to think of another solution. We have been taking a draw for payroll of the same amount for the previous 6-7 years. What are your guys opinion given our current situation of offering him 70/30. And also partner that is taking 30% of profits getting a salary of what we have been taking for the previous 6 years. I feel that if we could move the business forward by hiring additional help it would pay the 70% partner well and the 30% partner is guaranteed the existing salary + 30% profits. As far as responsibilities the 70% partner runs the business and the 30% partner is pretty much turning wrenches. Does this sound unreasonable or does anyone have any suggestions? I know it's probably hard to tell without numbers. I'm going to crunch some more numbers before I make him an offer as it may be to close at 70/30.

 

I really want to move this business forward, but not at the cost of our friendship.

Any help in this matter is greatly appreciated!

 

 

[xrac]

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[mspecperformance]

I believe you major problem is the operating structure. Even though you are 50/50 partners you are running 1 shop and there are no two captains to 1 ship. It seems like you may have an issue where your brother does not want to relinquish the feeling of being the owner. I have ran into this problem in the past as well. It also doesn't help that you don't have any dedicated front end people as you are turning wrenches and working the front end. There really should be a division of responsibilities IMO.

[Gonzo]

I take it your father is still alive, if so, ask him. He might be able to solve the problem seeings how he knows the biz and more than likely your situation isn't just behind the garage doors. I'll bet he's well aware of the situation.

[John Pearson]

The part that I didn't like was how you're renting the building for 2.5 times what its worth. Talk to you dad about the whole situation is he really wants you to suceed and wants to keep his building rented needs to help instead of just jump ship.

[Joe Marconi]

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[jinjabred]

Thanks for all the input guys! Yep, dad definitely knows what's going on :-) He came into the office Monday morning while we were having a "discussion". Mspec1performance has pretty much hit the nail on the head. 2 captains, but for the most part we agree on a lot of things. When it comes to the business end of it he has disagreed, but he is unaware of what it takes to run a business. We both agreed tonight that we're going to be too profitable this year to just walk away. As for right now we are going to stay 50/50. Also my father is going to help us out in the office, but I'm doubtful about how long that will last. I was very clear that if my father starts slacking I will hire someone to help out, whether it is a tech or office manager.

 

Thanks again,

Jordon

[FROGFINDER]

Tape everything and shop it around for a Reality show.

 

 

I wish ya'll were closer to Houston so I could help ya'll.

A mentor is needed.

Edited November 23, 2014 by FROGFINDER

[jinjabred]

I've thought about that taping it! It's not that crazy anymore. Now a few years ago... my youngest brother was also employed while my father owned the business, and looking back it probably would have made a good TV show :-P Things are going pretty well. Tensions came to a head, I told him that I respect him as a business partner to make decisions, and he should return the favor. He seems to see things one sided. He doesn't realize what goes in on the business management end. I've started to take more liberties on purchases for the business and decisions. I always try and run it by him. The business is becoming more profitible and that's what matters. So just wanted to say thanks again for the input!

[davine4real]

Right now you guys have high paying JOBS. if you want a business then you'regoing to have to hire people to work in it. I'd startwith anoffice personnel that can do MORE than write tickets. This position is often under valued. I also agree thatyou should have dedicated roles in whichyou get paid for. The profit split would be just that..a 50/50 split. I thinka 51/49 or 70/30 is indeed a power trip o . of some sort. Hireworkersso that at some point you 2 can step out of the employee suit i ifyou so desire...otherwise you just have a very high paying job.

[jinjabred]

davine4real,

 

I read back on the post and realized that I left out lots of updated information. So I ended up going ahead and running an ad for a secretary / office manager (in training) postition. I ended up hiring someone and have employed them for 6 monthes, against my brothers wishes at that time. She was out of the office this past Friday and left early on Thursday. My brother came to me and said, in so many words, that he didn't know how we did it without her. I feel bad for this girl because she has the worst luck... she misses work a lot. We have definitely been to lenient and are going to have a talk with her.

 

As far as the future, I'm definitely looking at hiring another tech, hopefully by the next summer. While my father was around he took in some "project vehicles" and I've been riding him pretty hard on finishing them up to clear out a bay. Once again my brother is not for hiring a tech, but I think that he's starting to understand that it will be a wise decision. We've done a little more advertising this past year and I think that it is paying off. I'm starting to have to turn away a few vehicles. I'm still turning wrenches, but this year I feel as that I've taken a step back, re-evaluated what my "JOB" is, come to realize that I am a business owner, and I know that I have a very strong influence over my future. Before I think I was so overwhelmed by large overhead, and getting the next car out that I was missing this!

 

I'm looking to the future! Hope everything is well with you guys and thanks again,

 

Jordon King

[Jordan Spain-Honaker]

Jordon,

 

Glad to hear things are working out. I know how difficult it can be to work with family. Do you have written out policies that dictate everyone's position, power and responsibility? Do you have any written policies at all? That one move saved our family and helped us open a second location.

[ATSAutomotive]

Have you thought about working up the numbers of technician productivity, car count, ARO, etc to show your brother that you are at capacity or not. Also keep in mind you time is split between office and tech so take that in to account. Maybe showing your brother the numbers and saying "hey we can't be any more efficient without more staff, here are the numbers"