Out of college, into a partnership?

carpal · 03-13-06, 05:21 PM

As a full time college student, I have spent the last year doing freelance web development work exclusively for one of my professors. It's been a really good working relationship over that period, and we have both seen the business actively growing. Recently he approached me about signing on full time after graduation (in May), and then suggested the idea of a partnership, with me owning a percentage of the business.

This is a very intriguing opportunity for me, but I freely admit that I know very little about what it actually means in terms of responsibility and financial implications. I understand that part of his motivation lies in the fact that right now, he's not in a position to match the kind of salary I could make elsewhere. I don't think this bothers me, as the working environment, the energy and creative stuff going on makes for a lot of that already. While I'm not concerned over what would be a small salary to start off on, what I really want is to be able to influence the growth of this business, and to be in a position to benefit financially from that growth.

He's been talking with his accountant to come with some ideas, and I'm looking for some advice so that I can enter further discussion with the right kind of head on my shoulders. Anyone here who can impart some business savvy onto a young'un?

**Max** · 03-13-06, 05:37 PM

Hi Carpal,

First off, welcome to the forum.

In my opinion, it sounds like a great opportunity for you. If your professor is offering you a partnership in an already established/successful business, then I can't see it being a bad move. Instead of starting your own business and accepting all the risks as an entrepreneur, your going to be placed into an up-and-coming business.

What are your other options? Have you considered starting a business of your own?

As far as the legal side of the partnership, you're going to have to speak to a lawyer.

I believe Spencer will have some great information for you. He is a college student who runs a business with a partner, so he is in a somewhat similar situation.

carpal · 03-13-06, 05:54 PM

Thanks! Glad to be here.

The only other option I have actively considered is taking an entry level position in another local ad agencies or design firms. The only major benefits I can see out of a such a path is getting experience in a place with a very well established infrastructure and the financial stability it could offer in terms of salary. And yes, while his business has been successful, and is running smoothly with a good client base, it has been a one man show so far. So in many ways there's a lot still up in the air with the direction it is going. It kind of feels like a start-up situation in some ways. The funny thing is even if I were to consider starting a business of my own, he is one of the people I would want to partner with.

Mostly I'm curious about the way such deals are structured, what I can and should expect, and how to be prepared to be able to negotiate for what I want.

Super Mod · 03-13-06, 07:08 PM

I actually do some part time web development work for some of my professors. However, it's just a part-time thing that only takes about ten to twenty hours of work per project. I don't see how your professor is going to have enough for you to do to hire you full-time. Is he having something for you to do that will take fourty hours a week? If so, does he have the kind of funds to make it worth your time?

carpal · 03-14-06, 01:27 AM

Well obviously I need to get more detailed financial information from him. His business is small potatoes, right, it's obviously still an on-the-side thing. Considering this fact, it has been very healthy, with new and larger clients all the time. Still, it does seem to be just barely on that edge of supporting a full time staff. For me to come on in this situation, it's clear that I will have to put a lot of effort into the company's growth in order to really reap the benefits of the arrangement. Also, I think the value of my input as more than just a developer is not just already evident to him, but also still largely untapped. I'm in a position where I'm ready and eager to really throw my energy into this company and the entire process behind making it both sustainable and excellent. If that's the kind of thing he sees out of this relationship, then he should see me as a major partner. This is what I'm thinking.

If not, well then that's a different story I guess.

anne · 03-14-06, 06:23 AM

It sounds like a good opportuninty to me. You've been working with him before so you have some idea if he can have enough work for it to be viable - just make sure that you draw up a good partnership agreement to protect yourself if things go sour later.

Josie · 03-14-06, 11:18 AM

IMHO, you need to sit down with this prof before going any further with this or even thinking about possibilities. I would meet with him and concentrate strictly on what his vision of this "partnership" is. You may be thinking he's offering you a lot more in terms of responsibility and ultimate ownership (in terms of involvement) in his business. You might find out that he really just wants to hire you now, see if he can handle having you on the payroll financially, and then maybe move into talks of a legal arrangement of some kind in the future, once he's grown the business. I know you have lots of ideas on how to grow his business, but he hasn't given you a clear understanding of what role you really will play, so I'd get his thoughts on that before going any further.

There are positives and negatives on each side for entering into a venture like this. Obviously you know the positives, but the negatives have to be considered as well since this will be your first job out of college. If his business fails or can't support you as a full-time employee (which is going to add a whole bunch of extra costs to him, not just your salary), then you may be out of a job sooner than you would like.

But before you worry about it or even get advice, which I agree you should get from an attorney in order to protect yourself in whatever arrangement he has in mind, you need to meet with him and ask him exactly what he sees the future as with you onboard. You don't have to talk about your ideas or expectations at this preliminary meeting, but it will give you the info you need to decide which of your ideas will mesh with his and if he's on the same page as you in terms of your role.