by Patricia Gilliam

Created on: March 08, 2008

There are mainly two factors about running a 3-person business that make it slightly more complicated than just working alone. One is how the business is going to be structured and the other is how is the day-to-day operations are going to be divided.

Structure Your Business Wisely

Obviously you want to get tax and legal advise outside of this article (I'm not an accountant or lawyer) for your particular situation, but I do want to share some observations from a business owner standpoint. I've had several friends go into business together using a partnership structure, and 99 times out of 100 it has not worked out well. Something always happens to where one or two people are doing most of the work but everything is being split equally financially. If anyone wants out to pursue another venture, the entire partnership has to be dissolved, and it's just a logistics and financial mess.

If you just want to work together with a couple of your friends, you may want to consider alternative structures such as two of you being sub-contracted by the third. This way you all have an exit strategy if any of you decide to move on to something else. Again however, talk this over with experts to make sure it's done legally and correctly.

Day-to-Day Operations with Equal Responsibilities

As far as operations, everyone needs to focus on their strengths first and then cover any weak points. One of you may be better with money than the other two, while another is creative and would do well with your marketing. The third may be the most knowledgeable about your product or service. The workload has to be divided fairly for you to be successful, but it may involve each person having the most work in a particular area. Learn from each other however, in case someone wants to take a vacation or has to take some time off due to illness. You want to have all of your bases covered.

Business Owner With Two Employees

A slightly different situation is when you're a business owner who's brought on two employees to help you. You may have the primary responsibilities while the other two are often doing work you used to do or may still be doing along with them.

Something that I've seen work really well especially in service businesses is basing pay on a percentage of what the person brings into the business. If you have a painting business for instance and are training an employee how to paint, you may start off with his or her pay being 70% of what they brought in for the job.

It's a win-win situation because you're getting 30% without doing the physical labor and the employee is learning new skills. As the employee becomes more efficient and skilled, you may able to raise their percentage to 80-85% and still be making more money than you were when they were at 70%. It takes some time and negotiation, but neither of you have to lose out in the situation.

I hope you've found these ideas helpful. Good luck and best wishes in your business!

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