Q. I want to expand my one-man band gardening business without taking on the risk of employing anyone - I do not feel confident enough to make that commitment. I am considering asking someone else I know who is thinking about starting up a similar business to see whether they will come in as a partner.
A. As a gardens consultant, part of my business involves what is called expert witness work, which can take on many different roles - always as an impartial and independent arbitrator seeking only to settle disputes as amicably and inexpensively as possible (this is the function required by the courts). All too often I see the unhappy results of "partnerships" entered into without due regard for the legal aspects of these binding arrangements.
Unfortunately, partnership arrangements are frequently entered into without any real thought or informed advice from an independent expert, which means talking to a solicitor. If your local solicitors are unable to help with this specialist advice, they will certainly recommend a firm that can.
When you are operating as a sole trader - either as a gardens contractor, landscaper or garden designer - the temptation to go one step further and expand (or in an attempt to try to enhance your apparent status in the eyes of potential clients by appearing to have a more substantial operation) by adding more names to your business is an easy road to follow. It could also be the road to ruin.
Regular readers will know that I am always optimistic, with an upbeat message at all times, but I am carefully weighing each word today because it is such an important subject with too many good people innocently walking into a legal minefield without appreciating the gravity of the decision to work with a friend in a formal manner.
Friends working together
Let us take the scenario where two buddies, friends since college, are both working in the same area and carrying out similar works. Both find that they need a helping hand with some jobs and perhaps even engage each other on an ad hoc basis, and enjoy the company.
Assuming they are both fully insured for public liability, they could agree which one of them would be liable for any damage caused during their time working together, although the client would look to the person who contracted the project. But already you can see the potential for complications - the person who caused the damage may not be the contract holder, leaving the possibility of a future dispute.
To formalise matters, the pair decide to change their letterheads and business cards to a new name. Perhaps joining two last names (Smith & Jones Garden Services) or initials (S&J Garden Services) is the most common and easiest form of teaming up. Business names that are stand-alone words, not necessarily mentioning the individuals' names, should be registered or a written agreement drawn up to prevent future disputes regarding ownership and intellectual property rights.
Once the names are printed in any form - letterheads, business cards, Facebook or other forums - anywhere in the public domain, the persons thus named are jointly responsible for the actions, debts and liabilities of all those named, even if the word "partner" is not used.
If either or any party - and there may be more than two named individuals in the partnership - carries out anything that may prove detrimental to the business, all of those persons named may be responsible for the actions of others.
For example, if partner A decides to run up debts by not settling an account and simply disappears from the face of the earth, the other partners will be liable for that debt, even if it was nothing to do with them or the joint-venture works. For that reason, very few if any suppliers would provide a credit service account to such a partnership. Anything less than a legal, formal limited liability partnership (LLP) would be unable to access credit.
The aforementioned example of potential difficulties regarding insurance responsibility is only one of a wide range of legal issues. These may include seniority of partnership, ownership and intellectual property rights of common signage, distinctive lettering or shared colour schemes and promotional material and liability for any warranty works, defects and retentions.
Possible additional charges
Your respective accountants may make additional charges for the increased work involved in separating invoices and tax liabilities. You may experience difficulties when invoicing - one or the other will be the beneficiary or first point of contact when payments are made by the client to the partnership.
A decision, made with the highest of motives, that enables you to grow your business, work with your buddy and enjoy the site banter, take on larger projects and become more efficient is one that requires careful thought and a serious talk with your solicitor. Of course, there are many highly profitable partnerships formed in all walks of life, including horticulture, with their successful career starting with that marriage.
Please do not be deterred by these words. We all continue to strive to improve and consolidate the future of our businesses. Partnerships and joint ventures are two ways to move forwards and permit expansion. With careful consideration, legal advice and the right choice of partner, the future is yours to enjoy.
Email your questions to: email@example.com
Alan Sargent is an independent gardens consultant at the School of Garden Management - www.tsogm.org.