Thread: Advice on starting my HI business

My friend and I are currently in training to get licensed as home inspectors. We have thought about starting a company and to go at it as equal partners. Do you think this is a good idea or bad idea? We've been friends for many years and have been partners for the last few years flipping houses. What are the pros or cons in going 50/50 with another inspector?

Thanks
Bill

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A partnership, especially a 50/50 partnership is probably the worst business entity that you can find. While a two man operation has many advantages such as a major reduction in marketing expenses, think about the end of the business rather than the beginning. How do you continue if one of you dies or is disabled? Do you really want to be partners with his heirs? Talk to any lawyer for a negative opinion like this. then talk to a good business lawyer to set up a functional business. C Corp, S Corp, LLC. or even a sole proprietor with one of you working for the other is likely a better choice. As Dave Ramsey says, "The only ship that won't sail is a partnership" or words to that effect.

Maybe even two independent businesses with some sort of cooperative agreement to share marketing, office space, etc.

Other than the business type (LLC) what pros or cons do you see in starting a business with another hi?

Contrary to what inspection schools tell you, it is hard to get enough business for one inspector during the first three years... double the need to grow fast.
Do some research about how many sales close in your area, how many other inspectors are competing for the same business.

Originally Posted by Bill Spatafore

Other than the business type (LLC) what pros or cons do you see in starting a business with another hi?

Something with two heads is a freak, and soon dies.

If you enter into a partnership you need to have an exit strategy. What will happen when the partnership ends?
You also need to have a clear understanding (in writing) about how the business is going to be run, such as decisions to spend money on...fill in the blank. Who will do what, and how will they be compensated.
How will you decide what to do when the vote is 1-1? It all needs to be thought out and put in writing. An attorney should be consulted.

Like others have said, partnerships are not an easy thing to run successfully for the long haul.

+ 1 on most of these replies.
The fastest way to fracture a friendship is to go into business with a friend.
Some have made it work, most fail.
Just from my observations anyway.

Probably nothing new here, but partnerships are a formidable challenge. Do-able, but not a walk in the park. Marrige is a fair comparison. I like one post suggesting a custom agreement to hopefully capture the advantages of a partner, while maintaining autonomy. If you might need a lawyer to unravel a partnership, regardless of the reasons, it's probably best to be content with friendship only.

As others have said, it doesn't work long term. I have personally seen it many times (I was one of them), both partners will eventually feel they are doing the lion's share of the work for half the money, when something goes wrong each person can find a reason to blame the other.
Partnering up to flip a house is one thing, finish the project, split the money and you are done, going into business with someone is a completely different animal.

You will be on your own most of the time anyway. You each need tools and vehicles, phones, the whole bit. You can share the work, but keep your own books and be independent. Having your own company is a tax advantage. Work as affiliates, not partners.

My advice is partnerships never work. Don't do it. A HI business take time to ripen but even if you had a sure guaranteed income for a business one person would do all the work the other would sponge off your expertise or working capital or take all the gravy and in the end leave you with his debt. People are more important than money so for the sake of your frindship don't mix the two.