Considering a partnering arrangement

[D Cooper]

I have a small business with about 40 clients, mostly home users. It's not enough to make a living but it's slowly growing by word of mouth. I recently had a discussion with the owner of an independent electronics shop. He repairs A/V equipment and offered to let me move into his shop. I can't afford to have my own repair shop and this would quickly give me traction in the town. He'd give me work space, electricity and network access. I'd also have his receptionist to greet customers and answer the phones so I could focus more on repair work. The problem is that he wants me to not use my company name. That basically means I'd be shutting down my business to be a subcontractor. I think his concern is that I could get established and then walk away. I have the opposite concern. I could get the business established and then he could hire a technician, toss me out, and I'm out of work. Has anyone ever explored an arrangement like this? Is there a way to make this work?

 

[mr m]

Like the James Gang said, Walk Away.

I work out of a home office and a client with a print shop wanted me to teach him the repair end of things in exchange for workspace in a store on a main road. Sales would no doubt go way up but at too great a price.

I've been honing my computer repair skills for almost 40 years and my break/fix skills are what separate me from the competition. When I worked for the man in corporate land I was always eager to teach and pass on my knowledge especially when I was in field service supporting other techs. Then after my 1st downsizing I landed a crappy job at a crappy company supporting their IT needs in there warehouses. After cross-training someone I hired the company decided to let me go and pay this guy way less. I made that mistake only once.

Your concerns which are different than mine are legit. The store owner also has valid concerns. These types of partnerships just don't work. Now merging with another computer repair outfit for the benefit of both owners is another story that can work but I know a lot of partners who hate each others guts.

 

[drnick5]

I did something like this when my company was just starting out. My business partner and I were working out of my house, doing only remote or onsite appointments, but were quickly outgrowing that and needed a retail space.

As it happened, my business partner was working part time at a local place that consigned stuff on ebay. The owner of the business wasn't doing well financially, and was looking to close up shop to go back into his employment field. We made a deal where we moved in and ran his company as well as our own from his storefront location. The original deal was for us to buy his business and run them both. After a few months of working this arrangement, we quickly realized his business wasn't worth what he was asking. To make a VERY long story short, his company didn't do well, and there were a bunch of skeletons in the closet, so we chose to leave. 1 month later, the store shut down. We contacted the landlord and signed a lease to move back in, we've been here for 8 years now.

While your situation isn't exactly like mine, if I were in your shoes, I'd have the exact same reservations that you do. Whats to stop him from having you get established there, and then firing you for a replacement leaving you out in the cold? I'd talk to an attorney, most will give a free consultation and advise how to proceed. It probably wouldn't be very expensive to have them draw up some type of agreement to protect you and the other guy. Maybe you could have some sort of termination clause requiring you to give a certain amount of notice if you were ever to leave. I don't have the exact answer to this, but a lawyer would probably be the best person to ask.

 

[callthatgirl]

He's not really a partner, but more of a "turn key" rental property, that is what that arrangement is. But in most turn key, you have a private office with a lock so legally he should not go in there.

I would wait it out, wait for your dream to happen, not his dream.

 

[D Cooper]

When he first broached the subject my first response was that I'd be interested but would want to continue using my company name. I know that he choked on that and when we sat down yesterday it was the first subject he raised. The thing is that I really don't want to run a store front. That's part of why I found this initially attractive. I could benefit from the location but wouldn't have the burden of maintaining stock or staffing a reception desk. In turn he would get a piece of my income and the opportunity to sell products to my clients. He sells lots of electronics equipment but very little in computer parts and supplies. Plus I personally like the guy. But I just can't see how it could work if I have to give up my company name.

I've thought about offering him a stake in my company. My thought was that if he owned a percentage then he wouldn't be worried about my walking away. I've also thought about proposing a contract where he would get residual for a period of time. I just don't know how all of that could work. I'm willing to compromise but not to just fold my business.

 

[oldtech]

There must be some additional information you have left out. I can't see any compelling reason to consider doing business with this person. People going to an AV shop are not there for PC support or he would already have the knowledge he is trying suck out of you for free.

He already is paying for the things he is offering you so there is no additional cost to him to do the deal.

Why in the world would you train your own competitor/replacement??

The repair shop aspect of your business is not where growth is in this industry (prepares to duck all the shoes being thrown by the shop owners here) nor is it in residential repairs. Residential should be considered a stepping stone to establish your business and name so that you can expand in the SMB market and should be left behind when appropriate or sold off to someone like the gentleman you are here getting advice about.

Your listing of the plus sides of such a deal makes me wonder what your living situation is that internet and electricity are a perceived benefit?? Receptionist is not of high value at least in my book.

 

[ComputerPro]

I agree with the rest here in that those types of deals almost always fizzle out in the end. There would be so many 'what ifs' too. For example 'what if' you wanted to get into phone repair..... but he said he has been wanting to do it for a long time? What if, a 'good long time' client of his has their PC fixed by you and for some reason they aren't happy at all? Then he would start to re-think things in a hurry. Sooo many things could popup. I myself wouldn't do it. I might entertain the idea of having him be a 'drop off' location. Then he would get a cut of the repair like he wants but you aren't stuck anywhere with your equipment in someone else's shop and using their name also.

The only thing I don't agree on, never have lol, is the above comment that residential should be a stepping stone and then sold off after you get some SMB clients. We do 50/50 residential and commercial and while commercial usually brings in more money, residential alone nets us a couple hundred K or so a year. We are the largest (independent) residential repair shop in our area 2nd only to the Best Buy in our city and our volume might actually be similar to theirs (minus the yearly contracts they do). We have a $99 virus/tune-up pkg that is our residential bread and butter and do tons of them each week. What could be easier or more profitable? But back to your question, I would probably stay clear of that deal as it sits. Just my opinion.

 

[Eagle21]

I have a small business with about 40 clients, mostly home users. It's not enough to make a living but it's slowly growing by word of mouth. I recently had a discussion with the owner of an independent electronics shop. He repairs A/V equipment and offered to let me move into his shop. I can't afford to have my own repair shop and this would quickly give me traction in the town. He'd give me work space, electricity and network access. I'd also have his receptionist to greet customers and answer the phones so I could focus more on repair work. The problem is that he wants me to not use my company name. That basically means I'd be shutting down my business to be a subcontractor. I think his concern is that I could get established and then walk away. I have the opposite concern. I could get the business established and then he could hire a technician, toss me out, and I'm out of work. Has anyone ever explored an arrangement like this? Is there a way to make this work?

You are right to be concerned.
If you no longer use your business name you will no longer be building your business. You will be killing your own business and using your expertise to build his business for him.
You will be working for him essentially as his employee (or subcontractor as you say). What salary and employee benefits is he offering - holidays, sick pay, superannuation/pension, health cover?

The only way I could see it working would be if you merged businesses and became partners in an A/V equipment / computer repair business.

 

[Wheelie]

"... this would quickly give me traction in the town ..."

How? It would give him traction in the town. I don't see much, if any, benefit in this for you. You would simply be building his business.

.

 

[glennd]

I can see this getting messy real quick...

 

[Mainstay]

We've been approached several times. The closest I've come to accepting such as proposal was considering a drop-off location, but even that I didn't feel comfortable being so closely associated with another business that I have no control over.

Plus, what about insurance and liability?

I can't say being home-based has been all sunshine and butterflies, but costs are low and the community I live in doesn't blink an eye.

I explain that I pass those savings (from overhead) onto them.

I don't see the benefit to you to enter into such an agreement. Build your business on your own terms, not someone else's (that's why you are self-employed!).

Also, I totally disagree about the receptionist comment. They are by-far the best investment you can make.

They act as a filter for all incoming communications, summarize your tasks, make schedules and appointments, writeup your activities, and generally help you to stay on task and on point...

A good receptionist is a vital asset to the team and is not to be underestimated. They are the first interaction a customer has with your business... you may be the "talent" but they are the face and (in my case) the personality of your operation. A good receptionist can encourage engagement, can minimize crankiness, can prep appointments properly, and can save you a ton of money in a myriad of sensible, non-technical ways.

I have spurned all of the automated scheduling assistants for a real-life human who has a personality and wit and decision making skills.

 

[Wheelie]

Keep doing what you are doing. Word of mouth is very helpful in growing your business - you have that working for you. Working from home is not the problem. I am running an extremely profitable break-fix business out of my home for over 10 years now. I could do more with a retail front but then I'd need employees <<but>> I don't want that. I like my freedom too much.

Be sure of this ----> your target demographic and your personality will be the two biggest factors to your success (assuming you have good technical skills). In other words your target audience must exist and you must have exceptional people skills. If people like you - word of mouth is amplified - they love having you in their back pocket for referrals. It makes them look good if you can take care of their friends at a fair price. That is how I have grown my business and done so well.

 

[D Cooper]

Thank you all for your advice. This initially sounded like a great opportunity to reach my client base. But the name issue is, as you've all reinforced, a deal-breaker. I'm going to have to refocus of marketing. I think I saw a forum 'round here that might be worth reading through

Again, thank you.