Ever try a tree service/landscaper partnership?

BBBTree

BBBTree

Location
CA
I've been thinking about doing this for a long time, and I finally talked it over with my buddy who is a licensed landscaper to partake in contractor group here. I'm not sure about all of the wording for this thing such as firm, joint venture, LLC, and so forth. Maybe somebody here has a little extra knowledge about this.

What I had in mind was to form a little LLC in which I'd take the role of the president. I would apply my tree service and license to this new business entity, and my landscaper friend would apply the same. He would be the general landscape department head, and I would be the tree dept. head as well as managing the bulk of the executive duties especially sales.

The bottom line in a worst case scenario in this group would be where somebody messes up, and brings a lawsuit on the rest. While we have insurances to cover these things, nothing is owned by the LLC except intellectual properties. Since all is owned privately, there is no back lash in the case this becomes a bad partnership.

These are just a few thoughts about this. I'm hoping some readers can add some facts and opinions.
 
what sort of partnership agreement? % of ownership,break up, shotgun clause, etc... Business lawyer should be involved to structure the agreement.
 
Why not just keep it loose? You can still refer work to one another. I for one would be wary of any official partnership that is legally binding. Things can get sour real quick. My buddy is a landscaper and we share an office/shop trade equipment back and forth and refer each other work. Yet we are not tied at all legally besides the lease we have.
 
[ QUOTE ]
Here's a good explanation of a shotgun clause.

http://www.investopedia.com/terms/s/shotgunclause.asp#axzz248KHtVu1


It's used to end a partnership.

[/ QUOTE ]

I don't think this clause is necessary. If anything about this grouping business get's to the point that something like this needs to be officialized and dollied up, it's done. Thanks for looking that up for me. I should have just looked it up.
smirk.gif
 
That sounds okay to me. I'm going to go a bit further here though, and see where I wind up. I want to offer the services of a said business without getting into all of the I know someone who does that too. I'm reaching for the idea that when a client understands the areas we offer services, the client assumes it's all within one house not multiple houses.
 
You may want to start as a joint venture to keep the two separate until such time as you're comfortable with how it plays out in reality. If his quality of work is akin to what you do, his marketing plans and target market are alike, if you don't get much business in the way of referrals from other landscapers then it may very well be worth exploring.

Just ask the hard questions about the what ifs and the downside of it to be sure the upside is worth it.

While the shotgun clause may sound a bit to rough be sure you have some sort of exit agreement that both of you can live by in the event things do go differently than either of you expected.
 
He does really good work, so that is all I need to know about his business. Definitely a plus. He's ethical and so forth, but in regards to marketing he hasn't given any kind of thought to it what so ever. I have the mind for marketing this, and that's what my part is about.

You must have heard about some examples of joint ventures, and it sounds like that's where two or more business entities under the same name (one business title) can practice without too much complication or potential for backfires. That sounds ideal for the time being. What I'd be concerned about is the liability, and in the case of a crash and burn scenario that I lose nothing. In order to maintain a level playing field I need to be able to prove that he cannot lose anything too. So the joint venture deal might be the best option, eh?
 
Here in NJ construction contractors, J. Fletcher Creamer and J. Sanzari formed a JV where they will tackle certain contracts under the Creamer-Sanzari JV banner. Remember the founding firms still function separately and act as suppliers to the JV. The JV pursues other specific projects.

Another form is the strategic alliance where you have an agreement to perform work together and to recommend each other without forming the third entity. An example of this is Starbucks and Barnes & Noble. SA's usually have an end date or a review process whereby the agreement can be renewed if the performance goals were met.

The SA would allow for a looser agreement without the need for a new entity to be created and at some point it could be the precursor to a full on merger or acquisition.

merger = joining of two equals to form a completely new entity. The merging firms cease to exist upon the creation of the new company.

acquisition = the takeover of one by the other where the buyer continues to operate and the acquisition ceases to exist.
 
I think that's some good info, TH. I can ask a lawyer or accountant about those specific concepts you bring up. I really don't want this whole thing to be a class A, heavy duty burden. Who needs all that, right? I just want to make some money, haha.
 
Yep, and the road to hell is paved with good intentions....

that's the rub. It sounds heavier than it would need to be in your case but definitely something you want your lawyer and accountant to help you out with just so the going is smooth.

Good luck to ya!
 
Hahaha, "the road to hell is paved with good intentions..."


I talked to the CPA today actually the assistant CPA. What I got from him is that the joint venture won't work because the state contracting laws will over ride the business structure prerogatives that I need in place to be sure it doesn't sink itself by means of confused and/or greedy members. It sounds like in order for the contractors board rules to be out of the way of the business the necessary biz structure that goes with my business plan, I need to make it an LLC.

I've been hearing that an LLC with an S corp tax structure is the best way to go. I'd just make everything a sole proprietorship if the liability benefits of the LLC came with it. And I guess the LLC owner only gets taxed once.
 
You don't want a partnership beyond a hand shake. He will have his business, you have yours. Stay close, but don't make it official. One day you guys are going to have a major disagreement, then you're both screwed.

I think you should always have the option to walk and bring in a different landscaper if he wants to do different things.

love
nick
 
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