Question
We are a small furniture manufacturing company embracing the principals of sustainable design. I have the equipment and manufacturing expertise, my partner has experience in marketing furniture products. Our common goal is to develop a complete line of RTA furniture, but we have no start-up money for product development, so we are forced to do a certain amount of custom work to pay the bills. My partner has little experience with the world of custom furniture and cabinets. This, among other things, has created tension and imbalance. Any advice on how to create a healthy "strategic alliance" in which I can pursue custom work on my own and he can, on his own, market and sell our designs and pursue start-up money?
Forum Responses
Don't! The marriage already has glitches. Partnerships are tough! There are enough lawyers making big bucks busting marriages, let alone business enterprises. Go your separate ways, you manufacture and he markets or becomes a rep. It's okay if he reps your product line.
You have all the equipment and manufacturing experience. You like doing custom work. It's never boring. Production work is. In the last 25 years I have been approached by at least 1 person per year willing to be my partner. He'll sell all I can make and take his cut. With NO risk to him. You don't need or really want a partner. You need or want a sales rep working FOR you. Want a healthy, strategic alliance? See your accountant and then your banker. You have the machinery, experience, and risk. That's 75% you, 25% him.
If you join with him, I fear you will regret it. You might end up buying YOUR business back from him.
Why not create a simple marketing agreement between the two parties. You could make the agreement exclusive for both parties, one or neither. If you do this, be very clear in the agreement about the duties of each party. If you are making specific items for him, it should also contain detailed specification on the items, projected volume levels, who carries the risk of inventory (raw material and finished), who has responsibility for collection for sales, and lots of other things I can't think of now. Lastly, add some wording that allows you back out if things aren't going right.
My advice now would be to get it all in writing and have an escape clause for both parties. We were a very good combo--I at selling and he at building, but with different dreams. I never lost so much sleep when making the final decision. Maybe we were better off not being friends in order to make things work. Think very hard about how you both want your future to end up.
I have the best partner in the world--it's an impossible mix of trust and companionship. I could never hire what he gives our business and vice-versa. I've also been through five or six other partners, where I've learned the opposite.
