Shall I take on a partner?

Hello,

I have been a sole trader and a partner in a firm.

The final decision on this can only be yours, but look at it like this: What do you gain from this? If your best client came to you with this, what would you say?

My own view is that the situation you describe brings you very little. By definition, NewBoy is going to want to concentrate on building his client bank and then servicing them, so he won't have much time to take stuff off your shoulders.

Again, from your description NewBoy is not going to be giving you a chunk of cash, so the inherant risk is going to remain with you.

NewBoy is getting the opportunity to build himself a nice business on your name, reputation, infrastructure etc and in return you get someone to talk to?

Whatever you decide, please let you all know.

Steve

A reputation (which you clearly have) takes many years to earn, and only a very short time to lose. It is your reputation which drives your success. Unless you are really exceptional or have an unbelievably good team you will not maintain your reputation long term trying to run 7 figures of fees on your own.

Will newboy do anything to protect that reputation?

The way you are putting it (effectively eat what you kill) it doesn't seem he is going to take any of the load off you. So what does he bring to the party other than some (probably immaterial) cost sharing?

I'm sure you would say to your clients that sometimes you have to take a step backwards to take two forwards. If newboy were coming in to take clients off you and lighten the load, then that would be good - even though it may mean a drop in your income for a while.

Or - you may just be the kind of animal that is best suited to hunting alone. If that is the case then you need to recognise it and organise your practice accordingly.

I cant help think that your mechanism for future profit share is going to lead to dispute or argument.

You hold all of the cards. NewBoy is getting the good deal. not you.

I think partnership is the way forward for you, but on your terms to solve the time issues that you have.

To be sure that NewBoy is right person, offer him a 6 or 12 month salary role, followed by full equity partnership.

NewBoy needs to show some commitment, and needs to bring something 'financial' to the table. If he cant raise any money himself (mortgage / loan), do you really want him as partner?

Value the business now. Lets, say, £1 million. He owes you £500k. You want £50k up front, and the balance over 10 years. Surely, his future share of profit would easily enable him to pay £50k a year?

Reading this i had to really think had a been posting in my sleep, you describe my situation almost to a tee, although my firm is slightly smaller and slightly younger i too am going through the same thoughts, in fact had two interviews lined up for tomorrow, except both cancelled yesterday!  Would be happy to have a more in depth chat to bounce ideas if you think it'll help

I don't think you need a partner, but you need someone to be a very good manager there, someone without any particular ambition to have their name over the door, to whom you can delegate crap, systems admin, deadline control etc and audit stuff.  By all means pay them well and give them a profit-share so they feel involved, but a two-person partnership is a very difficult beast unless you have genuinely complementary skills.

You're also a bit long in the tooth (and I'm even older!) and probably set in your ways to adapt to new procedures where you do not have authority.  You'd be unusual if you hadn't got a good deal of control-freakery now and that doesn't sit well in a partnership.  Delegating things to a manager  gives you the opportunity to dictate rough outlines of what's being done, but retaining control.

I built up a practice of about 500 clients & 6 staff but went into partnership with another practice when it all began to get a bit large / stressful and, although we all got along well enough together, it just wasn't the same as being on my own. 

So after about 3 years I slid out from under, took some favourite clients and started working from home. Not as good financially, at least not initially, but the client list grew and I have to say it's far better and more enjoyable, plus the clients get a better service. Using Iris, which is expensive but excellent, I now cope with all the clients on a part-time basis, leaving plenty of time for the garden, sailing, messing with classic cars and decent holidays.

So I agree that a partnership would be best avoided, we sole practitioners have difficulty getting away from the lone wolf mentality; get a good manager, delegate and go sailing or whatever !

First off, you seem to be kidding yourself. You said you have the 'perfect job' then listed a raft of challenges that would make most people think twice.

But you're right. The way you explain things it does seem like you have a 'job'. As distinct from being in the business of running an accountancy practice. But if you're happy (really happy) with the status quo, that's all that matters.

You have the opportunity to take on a partner. It's made you thnk about the benefits of doing so. Great. I'd encourage you to also consider the benefits of taking on a good manager who may be less ambitious.

What roles and functions would you like to stop having to deal with yourself? Do you need a prospective ambitious partner to do these?

Remember too that Newboy's behaviour, focus and attention will be determined by the (effective) targets set by the remuneration, bonus and profit sharing strategy. You will want to ensure these are aligned with what you want him to do and where you want his focus to be.

Mark

I dont think you need a new partner. I dont even think you need more staff.

What you need to do is invest some time in decent systems to run the practice.

If you do not have the time/skills to systemize, then get a specialist in to do it. Be prepared to part with decent bunce for this, it will be a lot cheaper than taking on a partner.

The next stage after that might be a capable manager to take a lot of the day to day stuff from you.  Its pointless getting additional personnel on board until they have a decent system to follow though, as all that happens is your fees billed per staff member falls.

EDIT: Well done on building such a large sole practice by the way!

@North London - ask yourself what causes the stress and demands on your time. Sounds like you may need to reposition yourself with some clients and review your role as well as improving the systems and management of the practice. It could also be that your pricing is a bit off.

If the new guy is like you he will join, build relationships with clients, learn from you then fall out with you and take clients and set up in competition. Bringing him in on top of the current situation is a recipe for disaster.

Bob 

I agree with above but fees of over 1 million for a sole trader GP is rather a lot. I am surprised you have any spare time at all.

You have done a brilliant job of building such a large, and hopefully profitable practice.

As has been stated above, the challenge you may face is due to lack of systems to allow your staff to deal with the majority of issues your clients face to the same level as you - this is easy, but time consuming, to implement. Assuming you have staff who follow systems of course!

Bringing in a partner would offer some help - I can see that nobody has mentioned the matter of who is going to be RI - both of you or just you? I can see that audit isn't your favourite thing, and I am the same. I could be an RI and do have an audit certificate but it doesn't float my boat so it's a necessary evil rather than a desire of mine.

At your stage in the life of your practice and career you need to think of your exit, so maybe bringing in a manager to take some of your burden away would help - however looking internally would be better than hiring an outsider because they will be more loyal and considerate.

If I were you I would be looking at 40 hour weeks and 40 days holiday - systems and a good team can help with this.

Long term - you need a strategy for succession - have you considered selling up to a larger practice and becoming a partner there to give you the support infrastrucute and exit route to being to enjoy the fruits of your labour?

It looks as though you have significant fees per staff member is this london pricing or just really good fees and staff???

Would love to hear what you decide to do, why and how this pans out

I have just received a letter from a local firm of CAs offering to take over my practice or rather acquiring the client base so that they can consolidate their position in the current market.

My thoughts are much the same as other posters will I be able to work with this new business or am I a sole practioner.  I think that the NewBoy would be geting a great deal for not a lot.  Get a great manager with a profit share and enjoy more of life.  You remain the boss.

As to the comment that you need great systems I agree but I think it would be hard for you to implement them, otherwise you would have done so already so consider buying a specialst to set these up

Keep us posted please

You don't need a partner.  What you need is people to do work.  I call those people "employees".  They're cheaper than partners.  If you treat them well, they're loyal to you.  Interns are the cheapest (free!), and they can be supervised and trained up by your employees.

Succession has been pointed out as a missed aspect of your business plan.  If you get a partner now, you cut off many avenues of succession.  Hire the employees to resolve the time problems first and work on the succession issue at the same time.  Only after you know your exit plan should you take on a partner, and then only if a partner is indeed part of the succession plan.

I wonder if you would get some value speaking to Andrew Grey at K&H - he has been developing a programme to help business owners develop their business using a programme called Built to Sell.

I think it takes a few years to work through but it could be something worth looking at.

Bob

"hungry, talented, bright" I don't know about you, but I don't think I could stand his company.

I would say, having been in one very happy and successful partnership, that if you can find the right person it works well. We basically knew each other and were honest about the result we wanted.

Having also had a period on my own and then a period with a different 'partner' I can vouch for the problems. Would not take anyone in as a partner until I had worked with them for quite a while (or knew them well at least).

To my mind the candidate is too like you for it to work and as as other posters say that is a recipe for disaster. I do not like your proposal from a business point of view as it will cause friction in due course.

I would hire the candidate for 12 months on a good salary and see if they fit. Mind you I agree with the posters that you need to sort your systems out first. I would wonder if you fired maybe 20% of your fee load if that would free your time without really impacting your income that much?

 Still best of luck and please post what you decide.