A couple of weeks ago I saw a post on a pizza chef page on Facebook (Pizzaioli in UK) where someone said they were moving to Nottingham in the autumn, were planning on finding a job in another sector and then opening a pizza takeaway with someone else, and they were looking for this someone else on Facebook...I found this puzzling and I commented on this post that starting a company with someone you don't know is like jumping off a plane without checking whether the parachute is working.
Having run a few companies with partners I know for a fact that even with the best of intentions it's not easy to get along. When there is money at stake people change. Throw in pressure, stress and possibly substantial debts and it's easy to imagine why a lot of partnerships fail. I started my small restaurant with one of my best friends. We went to school together and even lived together in London. I knew him to be very passionate about food and to be hard working and very well organised. He was one of those chefs that finishes the evening with a clean apron! Unfortunately I had never worked with him and thinking I am laid back and easy to get on with I thought any possible hiccup or difference could be easily resolved. I was wrong. He turned out to be very stressed at work, serving our customers for him was like going to war, he was constantly pushing and stressing our staff out. In the end I said I could not work with him anymore and we should either sell or I would buy his share. Once I bought his share, I felt like I had grown a pair of wings. I was free to experiment, change the menu, change the opening times and prices without having to fight all the time. Of course I have my faults as well and one should always listen to the two sides of the story, but this goes beyond the point here. The point is that whether we take my side or his side of the story, the partnership did not work, and I had known him for more than 15 years. That's why trying to find a partner on Facebook seems crazy too me.
On the other hand, without a partner, life is really hard. All decisions, all responsibilities and all the weight are on you. It can feel lonely at times. But most importantly is virtually impossible to expand or to take some time off (without having to close) without a person that you can trust to run the restaurant like you would. Somebody that's pushing in the same direction and has got the same goals and ambitions. A a partnership is particularly good when you complement each other skill set.
So, how do we find a business partner? This is hard to say, there is no magic formula. The only thing I know is that you always have to prepare for the worst. You have to put down in writing:
- who is doing what/responsible for what
- financial arrangements (salary/dividends/expenses)
- who is putting what money and what work in
- is there a budget to open (my partner did not want to spend time looking for equipment and then was complaining that the equipment I found was too expensive)
- what roles will the respective spouses have (don't over estimate this) I would suggest spouses should stay out of it
- can you give discounts/freebies, if yes to whom? Can your family eat for free? what if you have one kid and they have got 5?
- what's the exit strategy - are you going to retire here? are you going to sell when the lease expires? What if one of you wants to sell, how do you value the business?
- Lease breakout clause. You must have a way out. Whether you are in a partnership or not, as a minimum you have to make sure you can reassign the lease. If you can, push for a breakout clause. In my case I have a 6 months rolling breakout clause (basically I can give 6 months notice). I feel 6 months is generous, but you could have one every anniversary or every second year.
Let me know in the comments if you had more luck than me with business partners!