Business Opportunity!?

[chirpychippy]

I am hoping by posting this message on this site that people that are in a similar position could offer me some much needed advice.

A good friend of mine owns a Carpentry and Joinery business with his Father, his Father is looking at retiring very soon. Tom "the Son" has asked me if I would consider taking on his Fathers position within the company.

I am a Carpenter by trade but have never been Self Employed and am currently employed. Now Tom, specialises in Joinery whereas as I mostly specialise in Carpentry, i.e carcassing, 1st and 2nd Fix so all areas of Carpentry and Joinery would be covered.

Since Tom and his Father have been in business together which is more than ten years they have never advertised their business, all work coming through recomendation etc. Should Tom and I become business partners I feel that we would need to advertise the business and wondered what would be "in your opinion" the best way of doing this.

Importantly, I haven't been asked to invest any money into the
existing company at this stage nor at any other stage, they want me purely for me and my skills. I suppose in essence the existing company will remain and all we would be doing is giving it a Trading name and branching out more into Carpentry and Joinery as appose to mostly Joinery.

Both Tom and myself will be self employed at this stage and running the company together, so all profits, losses, costs etc will be split directly down the middle.

What I am looking for is some guidance as this is an opportunity that really interests me and something I would dearly like to do, but I do feel that I am to green to be able to make an informed decision at this stage.

Thank you if you do reply and I will happily answer any questions comments critiscms etc.

 

[PrenticeBoyofDerry]

Contact these
http://www.businesslink.gov.uk/bdot...58805&r.lc=en&r.l3=1077475650&r.l2=1073859137
free and helpful.

 

[Karinska]

I am hoping by posting this message on this site that people that are in a similar position could offer me some much needed advice.

A good friend of mine owns a Carpentry and Joinery business with his Father, his Father is looking at retiring very soon. Tom "the Son" has asked me if I would consider taking on his Fathers position within the company.

I am a Carpenter by trade but have never been Self Employed and am currently employed. Now Tom, specialises in Joinery whereas as I mostly specialise in Carpentry, i.e carcassing, 1st and 2nd Fix so all areas of Carpentry and Joinery would be covered.

Since Tom and his Father have been in business together which is more than ten years they have never advertised their business, all work coming through recomendation etc. Should Tom and I become business partners I feel that we would need to advertise the business and wondered what would be "in your opinion" the best way of doing this.

Importantly, I haven't been asked to invest any money into the
existing company at this stage nor at any other stage, they want me purely for me and my skills. I suppose in essence the existing company will remain and all we would be doing is giving it a Trading name and branching out more into Carpentry and Joinery as appose to mostly Joinery.

Both Tom and myself will be self employed at this stage and running the company together, so all profits, losses, costs etc will be split directly down the middle.

What I am looking for is some guidance as this is an opportunity that really interests me and something I would dearly like to do, but I do feel that I am to green to be able to make an informed decision at this stage.

Thank you if you do reply and I will happily answer any questions comments critiscms etc.

Hi Chirpy

Having read your post a couple of times, I'm unsure about exactly what it is you're being offered!
You say that they have a 'company' and yet it doesn't have a trading name. Is it registered with Companies House? Is there a 'business' bank account or just an ordinary current a/c in both their names?
You also say that you haven't been asked to invest any capital into the 'company' because your friend just wants you and your skills to, presumably, replace his father. I'm just wondering whether you would therefore not so much be going into 'partnership' with Tom but rather you would just be two self-employed chippies working together.
Forgive me if I have misinterpreted what you have said but that's how I read it.
A bit more information would be useful

 

[joinerjohn]

If your friend wants you purely for your skills, then he should be prepared to set you on as an employee, before considering a partnership.
As it is, what happens if he makes a loss for several months? Would he expect you to share the loss? Reading your post, apparently he would expect you to cover half of any loss. What then happens if this loss is thousands of pounds?

Tread carefully mate.

 

[HERTS P&D]

If your working for a company and getting paid weekly, then your taking a chance to leave and go self employed. It's very hard out there at the moment. Maybe your friend could offer you some work when your not working for the company. As said above tread carefully.


Andy

 

[conny]

As the others have said, especially Karinska, take care before deciding.
You say he will do the joinery and you will do the carpentry. Fine.
All profits/losses will be equally shared and split down the middle.
However, how would you feel if your section was making a good profit whilst his side was trading at a loss all the time? Would you be willing to use your profits to off-set his losses? My mindset says he would be happy for this to occur as it takes pressure off him to perform well.
Tread very carefully before committing yourself, especially if you have family considerations.

Let us know what you decide to do.

 

[Blasphemous]

I suppose in essence the existing company will remain and all we would be doing is giving it a Trading name and branching out more into Carpentry and Joinery as appose to mostly Joinery.

I think I've read this differently to some others. I read this as you are entering the company but you are going to 'change' the company name? I assume the company has a family name such as Fred and Tom Joinery Limited and you want to change it to Chirpy and Tom Limited? (that was an example).

If the company is doing well from 'word of mouth' then personally I wouldn't change the name (that's the name everyone is familiar with). I'd enter the company and 'gradually' change the name ie tell customers that you 'intend' changing the name and change it as some point in the future. That way you can go on generating work from the old company name but let customers know what's happening and build up new customers.

Ultimately though the 'name' isn't important, it's the reputation that wins you the business. And even if it is a family name, put pride to one side until the 'new' business is established enough to change the name, if indeed you really need to.

 

[OnwardandUpward]

I would see it like this-
You are being "given" half a company for nothing.
Look at what that company is worth.
Firstly you have the assets and liabilities. If the company owes £10k in back tax then you take half that debt. If it has a 10k Van then you get half that. So assess its value. They should be happy to show you the accounts.

Then you have the value of the company as a trading entity. This is commonly called the "Goodwill" of the business. This can be worth a lot. Think of what business will walk in the door for this company next year compared to a startup business in the same street. The value of that work or profit on it is the goodwill.

Taking both areas the business may be a great asset given to you for nothing or a useless liability that is worth less than nothing.

They may be making a good profit on work or be trading at a loss. Who knows until you see the books.

 

[chirpychippy]

Thank you for all the replies that have been posted, as I yet I have not made a decision but have taken on board the advices you have given me. I am going to get an account to look at their books and I will go from there.

Once again Thank you very much indeed, it is really appreciated, I will be in touch.

 

[conny]

Just bumping for those that missed the reply.

 

[geraint]

Just bumping for those that missed the reply.

what..........

 

[chirpychippy]

To try an answer the questions that have already been put to me "here I go"

The "Company" is not registered with Companies House as it isn't a COMPANY

Tom and his Father do not have a trading name either, nor do they have a business account, only a current account. This was explained to me in the manner that a business account was to expensive because of charges.

Basically, once the job has been completed the money goes into the current account, whether it be stage payments of just one final payment and the cost of the materials are deducted etc and the rest is profit "should there be any profit"!!!!!!!!!

There vehicle is paid for, there is no outstanding debts on the business, jsut the running costs. They have a fully equiped workshop which is rented from a farmer at a cost of £1600 a year.

And thats as much as I know so far, thank you

 

[JohnD]

it sounds to me like it is a Partnership but with no legal documentation

if you become a Partner you will be personally liable for all the firms debts "down to your last shirt button" as the saying goes.

If it is not a company there is no Limited Liability so you could lose your house. They may not have adequate insurance.

You need legal as well as financial advice. IMO you would do better to start as an Employee for maybe a year, even if your pay is on a profit-sharing basis. Make sure you do not drift into Partnership just by your, and his, actions and words.

 

[jrplastering]

Although i too am self employed a business mind has never been my thing (the misses runs it for me) all i will say though is a very good friend of mine got himself envolved in a partnership that sounded very much like the one proposed to you.
Anyway the long and short of it is it was a current account shared by the two and my friend did not realise that his "partner" was filtering money out bit by bit.
also doing shoddy work and did not tell my friend that his side of the business was failing, and was useing my friends money to cover his losses.
my friends partner then emptied the account and disapeared, the business obviously went belly up and m mate had to start all over again.
oh and by the way they were good friends before all this happend.

just be carefull what ever you do

 

[wreckedit]

Great advice here.

This may be a good opportunity for you but you must have a very significant roll in the job logging, parts, payments and expenses.

I thing your friend, a sole trader, is in a hole and needs you badly so make some demands in writing. Remember his business will fail completely without you.

Take advice with your friend from the bank about the banking arrangement.