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Can't speak for restaurant ownership, but I have two partners here at our engineering company. There are pros and cons. The main cons are: 1) not having ultimate say in any/ everything, and 2) splitting profits. The main pros are: 1) less time spent running the business versus doing real work, as the duties are split between us, 2) others can perform your official company duties when you are tied up with something else, 3) there are others who can kick in when cash flow is tight, and 4) where you have a big personal issue (serious illness, etc.), the others can keep things running and help maintain the profitability so you do not see much of a drop in income.
Eamon Burke
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I had a partner at a business. He was a great match to me--I worked harder and had better people skills, and he was better with money and paperwork. But then his wife didn't want him working Saturdays, or too late in the day. Then she'd cry because she couldn't handle being unsure about their finances. Basically, having a partner is the best and worst parts of sole proprietorship compounded. You do less work for more product, and have someone to talk to, but you pay taxes on that income twice over(and it's already bad) and you have two sets of lives to balance out one business.
If I had a friend I was very close with and we were already doing whatever the business was together, I'd go for it. But for now, I'm relishing the day I don't have to deal with anyone else's BS. Your friend may be like me--the cons of being a business owner are essentially non-issues, so partners are just extra risk, work and BS.
Rotary
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I have 19 partners. May none of you ever be so cursed. :smile1:
The previous posts have done a good job hitting most of the pros and cons, particularly the mention of the tax disadvantages.
I would only suggest that a comprehensive written partnership agreement is a must if you decide to go that route, and a good one can be fairly complex. This is your livelihood you're talking about and you really need take into consideration numerous factors . . . things such as distribution of profits, (now and in the future as things change), operating capitol to be maintained, provision for new partners or an existing one leaving, etc. I think our agreement is something like 20 pages long.
It would seem that a two person operation would require far less complexity, but in some ways this presents additional challenges. If your sole partner becomes lazy, disenchanted, has a crazy spouse, or simply goes off the deep end (over the years I've had at least one of each), you don't have ten other people to pick up slack or vote him down. Think of it as needing a culinary pre-nup.
The previous posts have done a good job hitting most of the pros and cons, particularly the mention of the tax disadvantages.
I would only suggest that a comprehensive written partnership agreement is a must if you decide to go that route, and a good one can be fairly complex. This is your livelihood you're talking about and you really need take into consideration numerous factors . . . things such as distribution of profits, (now and in the future as things change), operating capitol to be maintained, provision for new partners or an existing one leaving, etc. I think our agreement is something like 20 pages long.
It would seem that a two person operation would require far less complexity, but in some ways this presents additional challenges. If your sole partner becomes lazy, disenchanted, has a crazy spouse, or simply goes off the deep end (over the years I've had at least one of each), you don't have ten other people to pick up slack or vote him down. Think of it as needing a culinary pre-nup.
