In my experience, most remodeling partnerships do not succeed. Typically, two or three good tradesmen get together to start their own firm. Generally, they're guys who've worked their way up the ranks from laborer to lead carpenter, then go out on their own. Once on their own, however, they soon realize that running a company isn't as easy as it looks. Great trade skills don't necessarily convert to great business skills. Stress levels rise as responsibility for site production expands to include bookkeeping, meeting clients at night, preparing new estimates, and keeping up with taxes. As lead carpenters, they had the stress of completing one project on time and on budget. As business owners, they not only have to complete the job on time and on budget but they have to worry about collecting payment, paying vendors and subs, finding the next project, and so on.
I think most partnerships fail because the partners have the same expertise. Usually it's hands-on trade know-how. This often leads to all of the partners wanting to oversee production and no one wanting to actually manage the business. Partnerships that work best consist of partners with different types of expertise. This diversity gives the business a broader foundation and helps define the role that would be most effective for each partner.
All for one
Take our 14-year-old company, for example. With three partners, we design and build both commercial and residential projects. One partner, a civil engineer, runs our commercial department. Another, an architect, runs our residential department. I have a business background, so I run the administrative end. Being organized in this way allows us to separate responsibilities so that each partner can concentrate on his part of the business.
One reason why it works is that we all believe the company comes first, which simplifies business decisions. I believe that if one partner insisted on putting his personal financial interests ahead of the company's, Gardner/Fox would fail. We also share the same point of view when it comes to spending money. If one partner were tightfisted and never wanted to give employees a bonus while the other wanted to wine and dine every client and bonus all the profits away, the partnership would likely collapse.
All three partners meet once a week to discuss general business issues. When differences arise, we either reach a conclusion we all can live with or table the issue to give ourselves time for more research or to think things through. Because we trust each other's opinions and because we share ethical views, we've always been able to reach a decision everyone is comfortable with. We believe this insistence on reaching consensus keeps the partnership healthy and strong. Without shared values, simple decisions become a battleground. In my experience, partnerships that have to "go to a vote" to make day-to-day business decisions will eventually fail.
Several years ago our business was put to a test. A commercial project turned sour, and about halfway through construction we realized we were going to take a financial loss on the job. Because of our responsibility structure, the partner in charge of commercial work dealt with the project production issues, the business partner dealt with the financial implications, and the residential partner was able to stay focused on keeping the residential work profitable. Our partnership was able to solve the problem and survive by brainstorming solutions and reallocating responsibilities as needed. By contrast, I think it's difficult for a sole proprietor to deal with a large problem. That individual owner is an island, with few, if any, people who can appreciate the predicament he is in and offer inventive solutions. -- Mark Pennington is secretary-treasurer of Gardner/Fox Associates, Bryn Mawr, Pa.