ownership 1

[TFL]

hello all i posted a question in the "starting and running an engineering bussiness forum and i would greatly appreciate responses especially from structural people

thanks

 

[TFL]

i guess i should repost the question as well....

I was wondering what the usual time people are with an engineering consulting firm before they are offered ownership? i have been with a company for several years and the owner is always teasing me with being a partner and i was wondering how long people usually wait to get offered a partnership. i guess the question could be asked in two parts- how many years in the industry and how much time with the company.

also how much do people usually pay to buy into a company?

thanks in advance

 

[pmkPE]

I'll respond with questions of my own:
1) Why would a company want to make an employee a partner?
a) They want to retain (a) valuable person(s)
b) They want to elevate that person to a position that will enable that person to be on the same level with key contacts in their client's firms,
c) They are looking for an infusion of cash and/or
d) They want to lock that person in to their ompany.
(Golden handcuffs, non-compete agreements, etc.)
2) What is the makeup of the company you work for?
a) They are small, medium or large?
b) They have a niche industry/foothold and do or do not
dominate
c) They are competitive for the following reasons:
x, y and/or z;
d) They have high turnover,
e) They have low turnover
f) They are decentralized in their decision making
process,
g) They are centralized in their decision making
process (i.e. the "top" partner(s) make the decisions)
h) the corporate structure is flat or tiered?
3) What has the growth or decline rate for this firm been over the last 5 years? The last ten years? The last 20 years?
4) Do you know their competition? Real and perceived and potential in the near and intermediate future? How are they doing? What are they doing? What are they doing differently (if at all)?
5) Do you understand what is required of a partner? When times are tough and cash is not coming in do they require their partners to obtain a secind mortgage to keep the firm floating?
6) Are the current partners relatively youthful and will they be around for a few years? Many years? Or are they looking towards retirement that a fresh/new partner would help finance their retirement by buying into the firm?
7) Would you want financial responsibility for the obligations of this firm based on others decisions? (i.e. do you agree with the majority of decisions that are made in this firm and what experience have you had with other firms to know how others do things differently? Which is better and why?)
8) What would you want to be a partner?
9) Why would you want to be a partner in this firm?

I hope this gives you some things to think about. Hopefully your firm is alive and healthy and wants you for a partner for all the right and good reasons that not only benifit the company but also you!

 

[TFL]

Thanks for the time to compose a well thought out reply!!!!


1) Why would a company want to make an employee a partner?
I had thought of all these reasons for having a partner join. I would think the most realistic and possible worrisome is the golden handcuffs am also wondering is the mere promise of a partnership like I get teased with is a cheaper version of the golden handcuffs. More like a golden carrot held off in the distance.

2) What is the makeup of the company you work for?
Small company with only 2 employees at the moment. 1 new grad and myself whose has been with the company from the start. I actually followed my boss from his old company. The company is about 5 years old and I have worked with him about 7 years.

3) What has the growth or decline rate for this firm been over the last 5 years? Only been around for about 5 years and business has been getting busier hard to tell with out access to the books

4) Do you know their competition? Real and perceived and potential in the near and intermediate future? How are they doing? What are they doing? What are they doing differently (if at all)?

small state I am relatively familiar I have contacts in the other firms obviously could have a lot to learn.

5) Do you understand what is required of a partner? When times are tough and cash is not coming in do they require their partners to obtain a second mortgage to keep the firm floating?
I have a pretty good idea. Is always more difficult then you think

6) Are the current partners relatively youthful and will they be around for a few years? Many years? Or are they looking towards retirement that a fresh/new partner would help finance their retirement by buying into the firm?

my boss is in his mid 40s and I am 30. which is one of the reasons I think I am too young to be offered anything in the near future. I would obviously be a minor partner. He is probably thinking long term to groom someone. Very curious as to when people start getting let into the loop

7) Would you want financial responsibility for the obligations of this firm based on others decisions? (i.e. do you agree with the majority of decisions that are made in this firm and what experience have you had with other firms to know how others do things differently? Which is better and why?)

8) What would you want to be a partner? Don’t know that is why I am asking the questions

9) Why would you want to be a partner in this firm? Again I Don’t know that is why I am asking the questions and thinking ahead to the end of the year chat we always have about the upcoming year and the obligatory salary renegotiation. Also wondering if I want to make my stand here or look for other opportunities

 

[pmkPE]

Some more questions and thoughts:
1) What are the qualities and capabilities needed to run the business?
2) Do you have the desire to be an owner? Without desire all the positive qualities and capabilities will not get you through the tough times, and there will be tough times. (Obviously one hopes there will be more good times than bad).
3) Desire is related to committment. Committed owners have to put their money up front. Would you?
4) If you are interested in a "partnership" I recommend that the next time your boss 'teases' you with partnership you may consider responding "if your serious I would like to discuss it with you at our annual year end meeting". Be prepared for either of the following - he never brings it up again or he does. If he does you need to be ready with numerous questions of your own along with follow-up questions to his possible responses. Try to think of more than one possible response to every question that you pose and be prepared to address each and every one positively. To do this you should do research by reading through posts listed here and reading books and other articles that are associated with running businesses, engineering and otherwise, business development, managing people and resources, finances and all the "stuff" that goes along with the BUSINESS you are involved in.

 

[coloradobridges]

Sounds like you're already functioning as a partner. Why not make him an offer to buy shares? Get an accountant to value the company - maybe three times average annual revenue. Then agree that profits (or losses) will be paid out as an annual dividend based on percentage of ownership.

 

[RLJ]

tlf,

I have heard my whole life that a person will never get rich working for someone else.

Review your personal reasons for wanting to be partner: cash, prestige, power?

There is nothing keeping you from striking out on your own. Discuss it with some of those customer contacts you have. After all, I would bet that is how your current boss go to where he is.

Good luck.


RLJ s-)

 

[Ron]

Considering that you have been in business for 5 years and you have only two employees, I would guess that the owner subscribes to the philosophy of "Keep it small and keep it all"! Otherwise you would likely have grown already, considering that you say you are busy. At age 40 he's not yet thinking of retirement, so don't count on that dangling carrot, however golden, getting closer to you any sooner.

What is to stop you from going out on your own? You obviously take on projects that do not require a stable of resources. Could you not do the work yourself? Are you appropriately licensed?