My godfather has offered me a partnerhip, help!
February 3, 2011 4:43 PM   Subscribe

My godfather has offered me a job in his company. I am unsure what to do and need help!

He and a single partner run a company that is an intermediary between the dairy industry and the supermarket / grocery industry. I have been asked to step in as a partner because he would like someone new and dynamic to help the business grow

Furthermore, his partner will be retiring this year and my godfather would like to step away from the business within a couple of years as well.

He says that the business brings in about $50,000 a month and that initially I would be earning about $10,000 a month after the first year.

- What questions should I ask?
- What should be my concerns?
- What are the pitfalls?
- Has anyone been through a similar experience?
posted by mikeanegus to Work & Money (9 answers total) 3 users marked this as a favorite
Will you have a guaranteed salary immediately? I would be wary of that "after the first year" business.
posted by something something at 4:52 PM on February 3, 2011

I would want to know what kind of structure the business is. What kind of partnership is it? What is necessary to bring you in as a partner. What will your partnership interest be? What kind of liabilities will you incur? Is there a written agreement? A lot of these are legal-related questions.
posted by elpea at 4:57 PM on February 3, 2011

I would seek clarification as to "partner" (really a partner, sharing in profits and losses, or just a senior employee) and what they specifically expect from you. You should always be concerned about whether you have the right skills (or can acquire them quickly enough). Also seek to clarify how the business is legally structured and whether you are expected to share any risks. Find out if they have a formal written agreement. If they don't, consider tactfully suggesting one, especially if you're leaving an employment to begin with them.

Consider that being a true partner is like being married--and your new partners might expect you to work like a dog. Don't do it unless you like and trust both of them enough to want to be involved as a partner (rather than mere employee). I turned down a partnership with someone who is very good at making money because we identify and address ethical issues in totally different, incompatible, ways. But this sounds like a fantastic opportunity for you.
posted by Hylas at 4:59 PM on February 3, 2011

You'll want a contract, and the request can be framed in the respect of making sure that if anything happens to your godfather (business or otherwise), you need to be protected.

But if you know him well, sounds like he's looking to give you an opportunity. Asumming he doesn't have kids of his own?
posted by rich at 5:01 PM on February 3, 2011

What is the secession plan as people leave. If in a few years if its just you do you own 100% of the company? Will they want a buy out? Figure out now how you would take over this company in a few years and that they don't want to retire but keep 80% of the company. Along these lines it might be worth it to figure out who gets their shares if they die. Its ugly but dealing with a widow over company shares sucks.

Is $50,000 a year profits or revenues.

Do they pay themselves a salary or are they just splitting profits.

Are there benefits. Health, Dental, Retirement.
posted by bitdamaged at 5:11 PM on February 3, 2011 [1 favorite]

First, I would not make this contentious. I would ask to go to dinner or lunch with both of them to explain the opportunity to you. Ask them to tell you how they envision the transition occurring. Are there certain benchmark dates by which they want you to have taken over certain parts of the business? Is this a job opportunity or an ownership opportunity? $50,000 per month sounds great, but is it a business in decline? Were they making $70,000 two years ago? How much of the business is based on relationships? Their relationships. If a lot is relationship, are you the type who is willing to cultivate those relationships? Once they describe your role and the entire business in general, ask about the structure of the business.

Ask them what their concerns are and why they think you are the right person for this opportunity. Is it just because you are one partner's godson? I am not sure when to discuss this, but at some point I would consider asking for a trial period. Could you come spend a week with them and see what this is all about?

If you are in a situation where this is a work to earn equity, then you will eventually need to be protected as will they. You will both want to spell out the terms of the deal. You can look at this in two or three ways. One, it is a business opportunity to take over an ongoing established entity with nice profits. Two, you could look at it as a $10,000/month job that has tremendous upside, but if that doesn't work out you had a great job. THree, you could consider it both a job and an opportunity as well as a learning experience. You will learn a great deal about running a small business from this experience. It would be like getting an advanced business degree and getting paid to do it.

I would also talk to your parents about this. Going into business with a family member or quasi family member has issues of its own. You want to be open about what happens to the relationships if this does not work out.

Good luck.
posted by AugustWest at 5:49 PM on February 3, 2011 [1 favorite]

Is he asking you to invest any money, now or in the future, or will you be earning "sweat equity"?

How close are you to your godfather? Can you trust his intentions? (It's unusual for someone to hand over a chunk of their business to a non-relative, but if he's like a relative that would make sense.)

How much background/experience/education do you have in business?
posted by Jacqueline at 6:08 PM on February 3, 2011

Furthermore, his partner will be retiring this year and my godfather would like to step away from the business within a couple of years as well.

So the question is whether you see yourself running such a business a few years down the road. If you want to be your own boss and bring in a bit of money, and if this business is something you can enjoy, it looks like a good opportunity for you.

As for motives, he appears to be doing exactly what a godfather is supposed to do -- look out for his godchildren, help them get on in life, not just be there for one silly ceremony. He has a business opportunity and he could offer it to any of millions of people, but he's offering it to his godson.

Just make sure he isn't expecting you to spend the next 20 years, 300 days a year, travelling to and from farmers in Scotland and Wales, not if you expect to build a solid home life and maybe raise some kids that look more like you than like the guy across the road.
posted by pracowity at 12:03 AM on February 4, 2011

This does sound like a good opportunity, if it's a business you'd be interested in. But treat this as if it's any other business venture you might be thinking about going into - without the godfather connection - and carry out due diligence. Ask to see the books, and go through these with your own accountant (if you are all in the same small town, get an accountant from the nearest large town).

You godfather might be offended by this, but explain to him that, if he is thinking about you coming into the business as a partner, you need to be sure that there are no hidden surprises for you.

Make sure there is a partnership agreement drawn up by lawyers, and approved by your own independent lawyer. In that agreement, make sure the outgoing partner indemnifies you for any losses arising during his time as a partner.

I'd also be wary that if the business has income of $50,000 x 12 ($600,000) it is able to support, after running costs, tax, etc., income for you of $120,000 per year and, presumaby, more for him as the owner of the business.
posted by essexjan at 2:03 AM on February 4, 2011 [1 favorite]

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