Start Up Question

[JBlack1971]

Is it a good idea to go into business with a friend? For example, One do P&C and the other do L&H to have a full service agency where each would own their own books and pay a weekly fee to the "company" to cover expenses like rent etc?

 

[NCAgent]

Is it a good idea to go into business with a friend? For example, One do P&C and the other do L&H to have a full service agency where each would own their own books and pay a weekly fee to the "company" to cover expenses like rent etc?

Only you know your friendship dynamics and you have to keep everything separate from business and personal. If you believe neither you nor him could do that then I wouldn't pursue such a relationship.

However, as for a partnership, that definitely sounds good though because it's a warm referral and you are basically able to do twice the prospecting. Any lead coming in can be used twice, which is always a nice thing.

As for the weekly fee, make sure it's not more than the actual cost of having your own office (or close to it) and that you are truly benefiting from where you are over having your own place.

Maybe you and him could set up shop at a mortgage place or a real estate agent's building.

 

[JBlack1971]

I was thinking about setting up in a mortgage or real estate place. I have a friend that does hair and thats the arrangement he has with 2 other people. The 3 each pay a set amount which is enough to cover the monthly expenses and has been successful so I don't see why I couldn't make it work in insurance.

 

[Stephen]

I would recommend against setting up a formal partnership (the "company") and just splitting rent.

 

[eharriett]

I have a very successful partnership with someone I met when we were both captive agents for a company.

For insurance, our partnership is rather unusual. We split everything. When we first started, before we were a corporation, we split everything down the middle. In other words, if I got a check for $500, I cut her a check for $250. Since she's licensed and appointed and it wasn't a securities sale, that's legal in this state, but I'm not sure about other states. After a year, we created a formal partnership and corporation, complete with buy-sell agreement, and now everything gets paid to the company and we get personally paid accordingly. This is unusual for insurance, but it serves us well. We both pick each other up. I never have any question of how hard she works or how much she contributes and she doesn't question me, either. Plus there's the additional benefit of her picking me up when I have a bad week and vice versa.

I'm not suggesting you arrange a partnership like that. Goodness knows, there's plenty of reasons not to, but for us this works very well.

Also something important: we really aren't great friends. Sure, we talk every day, multiple times. But aside from telling each other how our weekend went, we spend very little time talking about anything not related to our business. We have very little in common. We are opposite genders. We both have significant others and friends with no connection to our partners. Personally, I bore the heck out of her, and her interests have little appeal to me. When I am not working on business, I don't really give her much thought and I'm sure she doesn't think about me either. I couldn't ask for a better business partner, and I'd never trade or regret either the business, or the relationship we've built, but I'd never say I went into business with a good friend. I have no idea if that is why we're still together or not. I'm just saying there's no dynamic of friendship there when we started.

 

[JCK818]

I started with my best friend of 15-16 yrs. We have had many jobs together growing up. We do split everything 50/50. There are months that he brings in more and there are months when I do. You just have to find each others strengths and capitalize on them.

 

[Guest]

It's a good idea depending on the relationship, track record of reliability etc.

You should create an agreement you both sign, with details as to who does what, finances, etc, how you share profits and a portion as to how you might come to an amicable end to the agreement.

Sounds good though.

Is it a good idea to go into business with a friend? For example, One do P&C and the other do L&H to have a full service agency where each would own their own books and pay a weekly fee to the "company" to cover expenses like rent etc?

 

[andreandunn]

It's a good idea depending on the relationship, track record of reliability etc.

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i agree, relationship, track record and most important is the reliability.

 

[GeminiGroup]

Can't tell but it sounds more like you want to split office expenses and NOT be ALONE all day vs having a 'real live' partner based on your post and comparison with the hair dresser.

That being the case...why not just get a place with two suites and a SHARED lobby/reception and conference like many attorneys do...just make sure the rent isn't so high as to put either of you out of business should one of you bite it ( the failure rate is REAL).

 

[smoothieking]

Having gone through this recently, there are a lot of questions (hard questions) that you all should ask each other. What if you don't like each other? What if one of you doesn't perform well? etc. etc.

I agree that if this is too difficult you all should just consider splitting rent and/or setting up a referral agreement where you all send business to each other.

And if you are going to start a company together -- the magic word is: vesting.