asked to become a partner

[celtic]

I am at the moment self employed in service industry almost one year.
I am making enough to take a wage and just about pay overheads. I cannot afford to pay staff and so I am carrying all on my shoulders.
Out of the blue I received a phone call from a competitor of mine asking about possibilities of becoming a partnership. He is working for himself from home, I have an office with good walk by trade and sharing all the expenses is very tempting but I am worried would we make enough to cover both our wages and make a profit.
The advantages would be not only sharing ongoing costs and expenses but also increasing the area I already cover.
I have already put my own finances into this business and only just paid off everyone including signage and stationary. This would all have to be replaced and would also mean a name change.
Should he pay something into business
I am exhausted and stressed out and very tempted to go along with this.
i would love to have someone else to work with but I am afraid I may be ripped off and he would take all my clients.
I can't decide what to do..... please help

 

[Brendan Burgess]

There are huge advantages and disadvantages to partnership.

Disadvantages
You will be jointly and severally liable for all the debts of the business. In other words, if he goes mad and loses lots of money, and doesn't pay his bills, you will have to pay them.

You lose control. You have to jointly agree business policies and practices. He may want to expand - you may not. He may not want to give credit to a particular client you trust.

You argue over the input to the business. You may work 80 hours a week, he may go off and play golf claiming that it is to develop the business through contacts.

You may treat customers very well, he may regard them as targets to be screwed.

You may have different attitudes to tax compliance.

So you should only go into partnership with someone you really trust.

Advantages
The advantages are huge also.

There is cover for holidays.

When you are busy, he can help out and vice versa.

His skills may complement yours. One might be good at promoting the business, the other may be better technically.

You can take on extra work.

You share overheads.

Advertising per head is cheaper.

There is someone to run problems by.

Possible solutions

If you think partnership generally is a good idea, it does not have to be this guy. There might be others whom you trust more whom you can propose the idea to.

It does not have to be a full partnership. You could operate separate businesses under one roof. But share a lot of overheads, workload etc.
If this "joint venture" works well, then you might merge at a later stage.

If you are exhausted and stressed, then you are taking a serious risk of burnout or worse. So you should investigate this.

 

[Vanilla]

By the way, if you do decide to go into partnership be sure to have a partnership agreement drawn up. This is because if you don't the legislation that covers it can be disadvantageous in the absence of a contract.