# To Partner or Not To Partner



## CaraJaya (Feb 2, 2008)

I am deciding to take on an interested partner. He would put up any costs needed and wants 50% of all sales. I want complete artistic control of the photos, design, and artwork. I have no business or finance background. He does. He also has a friend in the garment business whom can get possible meetings with Guess and Fred Segal. 

I am worried about not having control of the finances.. and wondering if I should get things rolling on a smaller scale on my own. I already have one boutique interested. 

This has slowed me down considerably as the potential partner is awaiting the prototypes and I cannot decide. Ahhhhh.. any advice or ideas from anyone?


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## pwapparel (Feb 16, 2007)

1st - I would clarify with him that he gets 50% of profits. If he is taking 50% of sales he may eat into any profits that you would make leaving you with cents per shirt sold.

2nd - If you have someone willing to put up the entire investment for you, I would wonder why you would hesitate. If he starts taking creative control simply back out and restart your self. ***BE SURE NOT TO SELL THE RIGHTS OF YOUR WORK TO HIM***

3rd - I would not be worried that he has control of the finances. You said you don't have any business or finance background, you will be better off letting him deal with those anyways. Just worry about creating designs, and selling shirts!

Hope this helps! Let us know what you do!


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## tim3560 (Jan 7, 2007)

Wow, that's tough. I would love to have a partner but I'm too worried about things getting done right. All I've done for the last 3 months is put all of my bus.'s profits back in to keep it steady and help it grow. I haven't taken anything, let alone 50%. If he's that good with finances he should know that too. But maybe you just mean that he'll have 50% control of the parts that he's better at and that might make your business grow faster than you could do on your own. I would go to lunch with him and ask him what his long term goals for this business are and tell him yours. If he sees this only as a short term investment, make sure that you'll benefit as well as he will.


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## MissaMouse09 (Feb 3, 2008)

I am also ready to partner up with someone 50/50 - I was wondering if any of you might have an idea where I can find sa template of some sort for a contract that can protect us all? So I keep creative control but we all are entitled to 50% of all profit. ??? Any ideas?


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## CaraJaya (Feb 2, 2008)

pwapparel said:


> 1st - I would clarify with him that he gets 50% of profits. If he is taking 50% of sales he may eat into any profits that you would make leaving you with cents per shirt sold.
> 
> 2nd - If you have someone willing to put up the entire investment for you, I would wonder why you would hesitate. If he starts taking creative control simply back out and restart your self. ***BE SURE NOT TO SELL THE RIGHTS OF YOUR WORK TO HIM***
> 
> ...


Wow, Thank you so much for your insights. It is really helpful to hear opinions out side of my brain!  And from a more knowledgeable view! Great stuff. 

I was concerned about the rights of the work going to whatever companies because he was saying that it would be nice if they printed the shirts and incur the fees on their end. I just wonder how all of that works into me choosing the fabric and all of the creative design. Thanks to you guys I have started a list of things to discuss in a conference call. I will let you know!


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## CaraJaya (Feb 2, 2008)

tim3560 said:


> I would go to lunch with him and ask him what his long term goals for this business are and tell him yours. If he sees this only as a short term investment, make sure that you'll benefit as well as he will.


Thanks Tim, that's what i will do!


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## Girlzndollz (Oct 3, 2007)

At one point, the part of my sales that I was keeping as profit was only 30% of the sales for the month. PWapparel states the most important point, the partner retaining 50% of profit is the only way to go. If sales are $1000 for the month, and net profit is 30%, you will only have $300. When the partner takes 50% of Sales, you OWE him $200 for the month.

Second point is Tim's. I also did not take a draw on my 30% profit, all of the proceeds roll back into the company for growth. Yours should, too.

I wonder if it is better to establish his stake in the company as an ownership of some sort, not a paid position with no limit other than 50%. What happens if you grow considerably, and his "pay" becomes an absorbanant amount of cash from the biz each month? 

Also, if you are the creative force, He needs You more than you need him. (IMHO). Your contribution is unique to you, his is not. I would seriously consider retaining 51% ownership, as well as first right of refusal should he decide to sell his stake in the company later on. Guarentee that you have first option of buying his share, as well as you must approve of any potenial buyers for his share.

I think if you are serious about taking a partner, you should consult a lawyer as well as an accountant. They will have your best interest in mind when they advise you to the liabilities you open yourself up to when doing so.

If a partner walks out, it could cost you everything you have invested, and you could lose it all. I would advise you to make sure your arrangement protects you lock, stock and barrel. Entering a partnership entitles each party to certain legal priveleges, and you need to know what they are and how they affect you. 

Call a lawyer and acct. If it costs you a few hundred for both, it will save you a hundred times over later.

(PS: My friends went partner with another couple on a Pizza place. They worked together a month b4 the other couple realized they were too lazy to do this. They walked, but, since they helped paint the place and the lady worked the register for a month, and helped greet customers during the opening month, she felt she helped establish the joint. She wanted 10 years of monthly payments on future revenue to pay her back for the contribution she felt she made during the opening. My friends had to take a home equity to buy their share, and it was that or take a huge loss selling. These peeps were all friends for over 10yrs prior. You never know, so if you love your business, protect yourself.) 

Sometimes it works, sometimes it doesn't, and no one ever sees it coming when they start down the road. Other than my advice to just protect your own self first, best wishes and good luck for a long and successful business venture!


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## dmob (Oct 1, 2007)

Hi!
Most the practical issue's have been covered comprehensively , however if you go forward with this partnership ( good luck if it works out ) you must address the issue of your creative rights. Essentially you must retain control of your designs and images. So be aware of your legal position regarding Design and Patents act
( UK, not sure of US equivalent ) do not assign away your rights without a cast iron license, and make sure that all rights revert to you after a set period or if the partnership ceases. Basically you designed them, you ( or your family ) own them.


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## pwapparel (Feb 16, 2007)

Girlzndollz said:


> Second point is Tim's. I also did not take a draw on my 30% profit, all of the proceeds roll back into the company for growth. Yours should, too.


You shouldn't take any profit from a new growing business. The usual rule of thumb is to make sure you have enough savings the are comparable to 6 months of income to live off of.



Girlzndollz said:


> These peeps were all friends for over 10yrs prior. You never know, so if you love your business, protect yourself.)


When I do any business consulting or even if it's just a short advice post like this I always tell people *never go into business with friends.* Personal life, and worklife are two completley different things. Not only are you likely to find unlikable traits about the person while working hand in hand with them, it will also carry over to your personal life. You are likely to fail your business AND lose a good friend by bringing them into your business idea.

Business should always be strickly business. Partner with whoever fills the cracks on things that you can't do. If you are great at creating designs, partner with a business consultant or someone that would be great at managing the day-to-day business operations. If you don't find yourself very creative but kind run an operation that is likely to take in loads of sales and be very profitable, partner yourself with a designer to work with.


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## CaraJaya (Feb 2, 2008)

Thanks so much for all of your advice. I'll let you know what develops after our meeting.


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## CaraJaya (Feb 2, 2008)

Girlzndollz said:


> I think if you are serious about taking a partner, you should consult a lawyer as well as an accountant. They will have your best interest in mind when they advise you to the liabilities you open yourself up to when doing so.
> 
> If a partner walks out, it could cost you everything you have invested, and you could lose it all. I would advise you to make sure your arrangement protects you lock, stock and barrel. Entering a partnership entitles each party to certain legal priveleges, and you need to know what they are and how they affect you.
> 
> Call a lawyer and acct. If it costs you a few hundred for both, it will save you a hundred times over later.



I am meeting with CFA tomorrow. I wrote down a lot of these points to discuss with her. I believe that the potential partner wants 50% of all PROFITS not sales as I might have said. I told you business wasn't my forte.  I am curious as to your point on my retaining 51% ownership. I will run that by the accountant as well. 

Question:
I trust this person, but how safe is it to send the prototypes to him without a copyright? 

Question:
Is it best to send to wait and send out a prototype that is exactly to my liking? I have them printed on American Apparel tees that are nice, but I would like something softer and finer. I was going to get some samples printed on the Alternative Apparel. I am thinking I will send him these and get new ones printed in time for any meetings he sets up.

You guys are so helpful and kind. I am so glad to have found this forum.


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## Girlzndollz (Oct 3, 2007)

CaraJaya said:


> I am meeting with CFA tomorrow. I wrote down a lot of these points to discuss with her. I believe that the potential partner wants 50% of all PROFITS not sales as I might have said. I told you business wasn't my forte.  I am curious as to your point on my retaining 51% ownership. I will run that by the accountant as well.
> 
> Question:
> I trust this person, but how safe is it to send the prototypes to him without a copyright?
> ...


Dear CaraJaya, 

Good luck with your meeting tomorrow. Great job watching over yourself and your best interest. If you trust him to set everything up and he didn't know exactly what he was doing, he could accidentally cause harm to either or both of you. So great job, and I hope you get alot out of your meeting.

Next, you wondered about waiting for copyright on your design before sending them out. Technically, as soon as you create them, they are copyrighted. Make sure you keep your files and dates created accessible, that is how you show copyright. If you file for formal copyright, that gives you a strength in the courtroom. 

I do have a question on this point: If you do not have money to take someone to court, say they ignore a cease and desist, does formally filing the copyright do you any good after all? Or, does the person infringing pick up your legal fees?

Cara, you'll have your files with creation dates giving you copyright, so you will win (should, haha, law is not chemistry) but in a perfect world, you win, would seem fair they pay the tab involved. Help, anyone know this answer?

Maybe also ask the CFA if they know how you could afford to do this if it happens. They may have some insight. Might as well get all you can from the meeting since you mentioned it, it's a concern.

Prototype: Honestly, regardless of the "standard" answer on this, I would send this fella a sample of the shirt you will produce as the "final product". You want him to be excited about the product. If he's setting up appointments and he is excited about the product, it will come through to the people he is speaking with. 

If you give him something that is not the end product, he won't really know what he's calling them with, and his lack of confidence in what he's refering to may also come through.

I hope this info helps. The other resource I can recommend is for you to contact your local small business developement center. They can help you, or the both of you, set up, start and grow your biz. It is a free resource. I had a 1 1/2 hr meeting with my councelor today, it's awesome.

here's the link:
Small Business Administration - SBA_TEMP_PROGRAMOFFICE

click on SBDC locator on the right to find your local SBDC. 

Best of luck tomorrow. GL!


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## TripleT (Apr 29, 2007)

CaraJaya said:


> I was concerned about the rights of the work going to whatever companies because he was saying that it would be nice if they printed the shirts and incur the fees on their end.


Hi, CaraJaya - It really doesn't sound like he's too sure of what the business plan will be, so be careful.

Even if he does have the money, if he doesn't know what to do with it you'll soon be heading for trouble. Make sure you get everything on paper and have an attorney check it out before you do anything with him. Good luck!


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## CaraJaya (Feb 2, 2008)

I had a meeting with a CFA. She advised me to get the business started on my own first. At least a shell of the business. The name set up, a website, a lawyer, etc. And she did say I should have atleast 51% control. Am I leaving anything out? I'm sure. I am going to get some better prices on printing and shirts so that I will have more of the logistics. There is so much information spinning in my head, so I am looking to simplify my plans. I will post more later.


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## Girlzndollz (Oct 3, 2007)

CaraJaya said:


> I had a meeting with a CFA. She advised me to get the business started on my own first. At least a shell of the business. The name set up, a website, a lawyer, etc. And she did say I should have atleast 51% control. Am I leaving anything out? I'm sure. I am going to get some better prices on printing and shirts so that I will have more of the logistics. There is so much information spinning in my head, so I am looking to simplify my plans. I will post more later.


 
Great, Cara. I hope it all goes well setting up. Have you thought about contacting the Small Biz Dev Center? They will help you with everything on your list and more. For free. I still can't get over them!

Have you considered getting prices from printers here in the forum? Theres the section where you can post requests for printing. 

Looking forward to your updates. Hoping all goes well - best wishes, Kelly


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## tim3560 (Jan 7, 2007)

Sounds like you're getting the hang of the biz. One more thing I would add is never be afraid to post pone or slow anything down if you're not sure that you're making the best decision.


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## MoustacheKC (Mar 19, 2007)

The thing is, though, Cara, it appears there were two reasons you were considering partnering with this person: money and business expertise. This new option leaves you with neither. 

In my opinion, it would be prudent for you to figure out a way to get at least SOME of those two needs, even if on a more limited basis. Perhaps instead of a "partner," you could discuss making him a "investor," in which he exchanges clearly defined business consulting time and more limited cash for a lesser share of the profits. 

Good luck!


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## CaraJaya (Feb 2, 2008)

Girlzndollz said:


> Great, Cara. I hope it all goes well setting up. Have you thought about contacting the Small Biz Dev Center? They will help you with everything on your list and more. For free. I still can't get over them!
> 
> Have you considered getting prices from printers here in the forum? Theres the section where you can post requests for printing.
> 
> Looking forward to your updates. Hoping all goes well - best wishes, Kelly


Thanks Kelly.

Yes, one of the first things I did was meet with the Small Business Development Center. Maybe I should make another appt with him. What we discussed was a lot about what a business plan entails, the pros and cons to having a partner, and how to contact wholesale companies to sell my shirts to. ugh. He suggested I get the numbers together for a business plan even if it was for my own purpose in planning. 

I also checked some of the printer's sections in the forum. There are so many. What I thought would be best was a "one stop shop" type of place. I did find a few. I have yet to contact them for pricing. I am not sure of how many I should get printed to start with or if I should get sample shirts before I get them printed. I am also unsure of which printing style is best..dtg or water based screen printing. I think will ask one of those companies opinions. If anyone has an opinion please chime in! I am pretty sure I want to use the Alternative Apparel Burnout Tunic. Do most "one stop shop" printers offer both of those printing options? And what will be best for black and white digital photos on white and maybe dark shirts if possible? 
I have been searching these things, but I am still not clear.  
 Cara


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## CaraJaya (Feb 2, 2008)

MoustacheKC said:


> The thing is, though, Cara, it appears there were two reasons you were considering partnering with this person: money and business expertise. This new option leaves you with neither.
> 
> In my opinion, it would be prudent for you to figure out a way to get at least SOME of those two needs, even if on a more limited basis. Perhaps instead of a "partner," you could discuss making him a "investor," in which he exchanges clearly defined business consulting time and more limited cash for a lesser share of the profits.
> 
> Good luck!


Yes, that is what I am trying to figure out now. I might borrow a smaller amount of money from a family member to get things going with a lawyer and more prototypes. I definately want to run things by the lawyer..like you said, the "partner" or "investor" route. My CFA also had mentioned that would be better. Thanks.


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## Irpud (Jan 13, 2008)

Good info in this thread, suscribed.


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## Unik Ink (Nov 21, 2006)

I have always heard, and seen firsthand the reasons not to enter into a partnership. There are too many variables, opinions, and strategies, with each other's financial future relying on the decision of someone else. I worked for a printshop in college owned by 2 best friends. It ran great for 8 years, but then things went bad, they split the partnership, still hate each other, and aired out each other's dirty laundry in court. Also, the almighty Dave Ramsey says that partnerships are a bad idea.


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