Brothers as partners

[dlandry@lsfcu.net]

I am writing for advice before my sons get started on a partnership. My oldest son came up with an idea for a phone app. My younger son is a computer guy and will be doing all of the work to develop the app and also has come up with his own important significant ideas to enhance the app. My oldest son will do the paper work such as setting up the partnership accounts and will research and acquire legal protection etc.. I will do the payroll and tax work for free for them My question is what should the percentage of profit be between the two boys. I don't want the boys in the future if this idea works to be at odds with each other..
Keeping the peace before they start.
Thanks for the help

[Freelancier]

My guess is that it's not going to be the percentages that create a future rift. It's going to be a bigger decision where they're not on the same page.

In any partnership, one partner has to have ultimate decision authority for it to work (and that includes voting authority). Talk with them to see who wants to have that responsibility.

[huggytree]

almost every partnership I know fails....I think ive known 8 that have died....only 1 left that's still alive...and they are both REALLY easy going...

I would expect the partnership to fail....and odds are at least one of the brothers will not be happy with the other

seeing its just a App. and not a normal business w/ employees it may work out.....

as far as % id ask either what they think it should be and meet in the middle....get them used to meeting 1/2 way with each other

hopefully they will still be friends/brothers next Christmas instead of enemies

[Wozcreative]

An app isn't a business unless they have a business model behind it. This is where they both need to sit down and iron out a lot of detail on how they will grow/turn this into a viable business and not just a product.
Huggy's comments are right in that very few people that have previously known each other end up working well together in business. One needs to be the boss though and the other has to be the helping hand. I don't know about ownership percentage but for a developer/designer it takes about 40 - 80 hours to get something off the ground to begin with. I can only guess that your developer son, if motivated, will have more work to do to start.

All business books will tell you that they should seek an attorney and write a contract of agreements on all cases. Who owns what, who's responsible for what, if something goes wrong who pays for it, if they choose to quit what do they get etc.,

On another note the profitable apps spent on average $30,000 on marketing their app. A total of 80% of apps don't make a profit for their developers. 99% of apps downloaded get used only once. It's a very hard business if you are basing your company off an app and planning on making a profit.

[kimoonyx]

I hate to echo bleek but I have to agree with Huggy and Woz. I myself went through a partnership debacle having partnered with someone early on in 2009. He was already in the industry operating in retail specifically and at the time it seemed like a good idea to get my specific idea rolling regarding setting up stores for others. I tried everything to get it right, even hired a lawyer to do the partnership agreement, but in the end... I disagreed with many of his decisions and knew that they were not in the best interest of the business I was very interested in building...As such, When things escalated to a boiling point and I refused to play ball, I left and started my own company. It took a lot to overcome the old partnership, but now that I have, things are much, much better. I have been able to regain control of this vision I have for my company and it is now in a leading position in my industry. Instead of partners, I now hire folks that I need, NO PARTNERS. If I have a direction I want to go, I do it. When you have two guys trying to be the leader, and neither one of them backing down, it will not work... it can not work. trust me on this...the son that is the developer needs to take this app, make it his own, and pay someone to do startup paperwork, if he cant manage that on his own which honestly...if he is developing an app, I think he can manage. Support your other son on Ideas that he comes up with as they happen, but If I read your post correctly I don't see the need for the developer to take on a partner. Paying people for their work is well worth not having the headache of having decision making held hostage.

[Wozcreative]

Paying people for their work is well worth not having the headache of having decision making held hostage.

Great point!

[shadojake]

My brother and I bought out my dad when he retired. My dad retained a minority, but controlling, interest in the business till we got to a certain point in buying him out. I worked a little in the business but my dh worked fulltime with my brother in one of the 2 stores we owned. About 1.5 years into the partnership, brother and dh began to have a parting of the ways. To the point they almost never talked to each other. It got to a point that dh and I began gathering financial info on both stores and customer info we needed to approach him about splitting the partnershp or .... one of us was buying out the other. About 2 days before we called a meeting my brother called a meeting with us and dad. He wanted to split the partnership. It all went pretty smoothly though things have been very cool between db and us till recently.

I have never known any partnerships that work out. Dave Ramsey (Dave Ramsey Homepage - daveramsey.com (http://www.daveramsey.com)) also recommends never going into partnership.

If you decide to do this, get everything in writing and done legally and signed by all involved. Expect any partnership to change the relationship between your sons, and not necessarily for the better. I'd advise one hiring the other as a contract employee instead of being parnters. I don't enough about apps to know whether it will make a viable business.