Essentials

Many roofing professionals leave jobs to begin businesses of their own. And often, they look to develop partnerships. Choosing the right business partner is important, and to do so, roofing professionals need to ensure they seek a partner for the right reasons.

According to www.inc.com, people often want a partner for the wrong reasons. Sometimes, people are anxious about starting a business alone and wish to share the fear. At other times, people partner with their friends. Although this is a nice thought, a business founded on friendship is by no means foolproof.

The Web site www.inc.com offers advice with regard to choosing a partner and knowing when a partnership is over.

Choices, choices

A business partnership often is compared with a marriage—trust is important, and choosing the right person to trust is imperative. Therefore, it is recommended potential partners "date" first.

Find some way for you and your potential partner to collaborate on a business project, whether it is meeting a deadline, subcontracting with another firm or bidding jointly on projects.

In addition, have an in-depth conversation about what you expect from each other during the partnership. Ask your potential partner whether you can speak to his former partner or a business associate so you can get an insider's view of your possible partner. However, do not simply scrutinize your partner—scrutinize yourself, asking friends or family members to tell you your strengths and weaknesses.

If you do not already have a partner in mind, there are various ways to shop around for a potential partner. You can have your colleagues refer people to you, and you can also pull from contacts you make at industry meetings or events. For more adventurous people, another way to find a partner is online, visiting message boards and listserv groups.

Ups and downs

As with any aspect of life, business partnerships have advantages and disadvantages. One advantage of a partnership is sharing a hefty responsibility with someone you trust and profiting from that. Financially, another advantage is that in a general partnership, you don't have to register with your state and pay an exorbitant registration fee as corporations often do. Also, because partners and not partnerships are taxed in general partnerships, filing income tax returns is not as difficult as it would be for a corporation.

However, if your partnership is not a corporation, you and your partner or partners are personally liable for any liabilities or debts. If your business ever faces risky situations resulting in lawsuits, this could be a big problem.

Another disadvantage is the possibility that partnerships can end badly at any time, and this can cause major conflict and loss. However, issues can be anticipated if you are observant, and as a result, you may be able to keep your partnership from falling apart. Look for a change in the partnership if the following occur:

• A partner divorces.
  
  
• A partner includes a spouse or family member in the business.
  
  
• A partner wants more money taken out of the business for his financial needs.
  
  
• Your company experiences sudden growth.
  
  
• A partner starts making business deals on the side.

Find a happy ending

If constant problems plague your partnership and you and your partner believe you have tried everything—talking, seeking counseling—it may be time to part ways. However, breaking up a partnership does not have to be tragic if you and your partner prepared yourselves early in the relationship. A way to end a partnership often is not considered when two or more people optimistically join for a business venture. Here are some fair breakup techniques to consider before ending your partnership:

• Have one partner submit a bid and the other partner sell the business at that price. If the other partner wishes to buy the business, he should submit a counteroffer that is at least 5 percent higher than the original offer.
  
  
• If there is a definite buyer and seller, have each partner hire an appraiser and then hire a third independent appraiser. Reach a selling price by choosing the appraisal closest to the independent appraisal.
  
  
• One partner should name a value assessment for the business, and the other has to decide to buy or sell the company at that valuation.

There are many partnerships that succeed; but many fail, as well. That is why it is important to carefully choose your partner. This way, if the partnership has to end, you can trust that it will be done fairly.

Krista Reisdorf is associate editor of Professional Roofing magazine.