Well, Sandy and I are here in Newcastle upon Tyne in England. Oh I’m looking forward to a pint of real ale tonight. On the train ride down from Edinburgh I was thinking about partnerships, and thought this is a good topic to talk about.
I was lucky when I started in business. My two partners were also my best friends. I think based on our students who show up to the Colorado Boy Immersion Course that accounts for most cases. The other half are usually husbands and wives or partners in general.
Anyway, my two partners (eventually we picked up a 4th) and I got along really well. One was my best friend since I was 10, the other since I was 20. In fact all three of us were roommates in our early 20’s and occupied a run down house in the student ghetto by the University of New Mexico that we affectionally called “The Palace of Fun”.
The great thing about starting with a partner is the project seems less scary, because you can share all your concerns with the people involved who are also scared shitless. We enjoyed each others company and really knew each other well, so the work was not so bad, and when success came, it was all the more sweeter.
However when it came time for me to move on after 14 years and 11 businesses later, the break up turned nasty. Well not nasty, just not satisfying.
The reason is we never figured out how to unwind the thing. This is something that should have been done at the very beginning of the process. Had we done that, it would have taken the emotion out of it.
My piece of advice for this week is, YES partners, if it is your first time in business. It will be much easier than shouldering all the responsibility on yourself.
However, in order to do this successfully, there are things you simply have to do at the beginning of your project.
Make sure you outline what each of your job descriptions are. How many hours you expect each other to work, and how you will be compensated, or in the beginning, how much you will work for free.
Come up with a formula that calculates a buyout if a partner leaves, either because they want to or are forced to. And, how long they are a partner. In other words, if you kick out a partner or they want out, but you have only been open 6 months, how will that affect the buyout? Also, how much is the business worth. I wrote about that here. Finally, the mechanics of buying out your partner. Cash out or pay over time. I was bought out over a period of 7 years. That kept the payments down to something manageable for the company.
Include a Non-Compete clause, so the ex-partner can’t open the same thing within a period of time.
You should be able to hammer out these details in a day and then include them in your corporate documents.
The truth is partnerships don’t last. They hardly ever do, so I can’t think of anything More important in your brewery set-up. Here me now, or believe me later.
Incidentally, my old partners are still great friends. And friendships I think mean more than business. Having your buy/sell agreements in place at the beginning will ensure that you keep those friends.
I would love to hear any feedback and especially any questions you have about starting a brewery. Really.
Enjoy your vacation…and all the cask ale!