Atlas sighed, then died

STRANGE HOW THE best advice you've always followed all your life and for good solid practical reasons, such as never playing poker with a man named "Doc" or responding to e-mails promising riches from a former Nigerian government official, all of a sudden goes right out the window. All common sense and apocryphal anecdotal horror stories go by the wayside when it involves deep, close personal friends

STRANGE HOW THE best advice you've always followed all your life and for good solid practical reasons, such as never playing poker with a man named "Doc" or responding to e-mails promising riches from a former Nigerian government official, all of a sudden goes right out the window. All common sense and apocryphal anecdotal horror stories go by the wayside when it involves deep, close personal friends and friends of friends and loyalties and trusts generated through years together in the trenches fighting the battles we all fight together daily.

I never wanted to go into business for myself. Not in the mechanical and plumbing business at least. I simply enjoy my specialized niches within our industry too much, that of being a senior-level project manager and estimator. It's a job description for which my personality, intelligence and mindset are ideally suited. I never had the egodriven desire for ownership and total control that being an owner or, in this case, a one-third owner of a partnership of a fledgling company brings.

My recently dearly departed "Pop" always told me since I was little that I didn't have the fire in the belly or the hardcore mindset to be an owner of a plumbing or heating and air conditioning firm. He told me I should stick to what I know and do best: running crews; abusing GCs, owners and salesmen; and doing perfectly detailed estimates. He also told me that "partners are nothing more than dead weight" if you are in business, something that also stuck with me all my life as well.

Our boutique partnership at Atlas Heating & Air was with two other senior-level middle managers of a large HVAC company that went bankrupt. We decided to go it on our own because we individually had made our former company literally millions of dollars each. But Pop was right: I didn't have the fire in my belly to be an owner (my two partners approached me initially, I didn't approach them) and that translated into the fact I didn't have the stomach to do what was sometimes necessary for our company to survive.

The second problem was that our roles didn't mesh. Being the most senior of the three in age, experience and also having the necessary unlimited contractor's licenses, my presence was needed or our business couldn't have gotten off the ground. The most qualified partner to be day-to-day operations manager was also the most junior in age and didn't want to give up his recently acquired $1,500-a-week job until the other partner and I grew the business enough to where he could quit his existing job and come on board full time.

Since I am physically unable to do fieldwork because of past, job-related orthopedic injuries, the one remaining partner and hired help had to do all the fieldwork. That partner resented it and that eventually lead to his quitting without warning.

Finally, we never did get around to having our lawyer draw up a formal partnership agreement, which further compounded that severe biting on our collective behinds. Lessons learned from that:

  • Even it's your own brother, have every single detail of expectations and contributions drawn up in a partnership agreement by a lawyer, not your bookkeeper and definitely not by one of you.
  • Every partner should contribute equally financially or in-kind as far as fixed, real, tangible or liquid assets. When one partner contributes less than the others do, even if the reasoning for doing so is logical, such as that partner will be doing the lion's share of the fieldwork, it seeds resentment and hard feelings.
  • All partners should quit any existing jobs they have and concentrate solely on the new venture. When you become partners in a new business, you do so because each of you has different strengths, knowledge and abilities that the business needs to succeed. The business can't use them if the owner of those skill sets is using them for what amounts to a competitor.
  • There should be a clearly defined "exit strategy" for dissolving the business, should that become necessary. All businesses have a birth, life and death, and if you don't plan for its eventual death, it can't have much of a life.
  • On top of everything, we had been promised literally millions of dollars worth of work from new and existing customers of our old employer that couldn't fulfill existing contracts because it was bankrupt. Those customers had a good relationship with one or more of us and liked and trusted us and our numbers were correct. Yet in the end we didn't get a single dime from any of them with any explanation as to why not. If it's not in writing, promises are worth the proverbial paper they're not printed on. Don't think for a second that promised work for your new venture will become actual work until you have a legally binding contract in your hand.

Add to that a bunch of other little mistakes. We let a partner put company vehicles in his personal name instead of the company name because it saved a little on our insurance. We inked long-term contracts with the phone company and credit card company and such in order to appear more legitimate when other lower-cost options were available (I'll be personally paying for this mistake for the next year or so). Treat company assets as personal assets or vice-versa and you have a recipe for disaster.

I don't know of a single senior-level project manager or estimator who hasn't at least entertained the idea of going into business for himself or with a partner. Some of us have actually done so. Most of us will at least give it a go sometime before we retire. A few of us will actually succeed.

This sounds cynical, but if you do decide to go into business for yourself and take on partners, treat your buddies/partners as if they were total strangers with whom you decided to go into business. Then do business with them as a business partner, not as friends, or you'll regret it.

H. Kent Craig is a second-generation mechanical contractor and project manager with unlimited Master's licenses in boilers, air conditioning, heating and plumbing. He can be reached by calling 919/291-0878, or via e-mail at [email protected]. His Website is www.hkentcraig.com.