Next Move

As some may know, I teach and own a law care company. In spite of this, I’ve been managing to scrap e-waste at night bring in, on average, an extra $400-$600 per month since January (closer to $800 the last couple months). An opportunity has presented itself to me and I really want some opinions from you guys.

Two entrepreneur friends of mine have out-grown their home-office and are looking toward renting an office. They asked me to go in with them to split rent three ways to which they would give me the garage and an office. Right away were talking $1500 per month with utilities split three ways.

Cons:
This alone would eat up any profit I had been making from scrap.
I would need to go legit with the biz and get licensed and insured (which means Uncle Sam would want his share)
I would obviously need to pay someone (or have my wife) be there while I’m teaching or landscaping.

Pros:
Would give me access to a large garage in a great location, allowing for drop-offs.
I would have access to their secretary, although it would cost me to use her.
I could officially be the only dedicated e-waste company in my city
There is little competition but some of the yards are starting to break into e-waste.
I could also break into new markets with lawn care.

Thus, to do this, I would probably need to bring on my brother as a partner so that we can share the time and costs. I’m not crazy about partners, but, my brother and me are very close and he would let me run the company. Worst case scenario is I leave after six months and contiune opperation from my home (hopefully bringing some new clients with me)

Thoughts?

Sharing space with another business, especially a complementary one, makes sense from an economic point of view. The down side is that when one of the other businesses pulls out, your share of the overhead shoots up dramatically (unless you can quickly find a replacement). I'm in the flooring business and have shared space with interior designers/decorators which was a good fit. Unfortunately, their departures were very disruptive to my operations and probably cost me more than I gained while they were sharing space with me. If all you need is a garage (or similar) and a small office, check out what's available in an industrial park. It may cost the same or maybe less without the risk associated with sharing space. Also, in any business, you need to be careful not to become a slave to your overhead.

There is lots in your question I have to say I have no idea. The one area I reccomend you consider is the three way split on the rent. Its sounds like your name would be on the lease along with the other two. I would stay away from this way of doing it. If you are ready to jump into expansion then get your own space. You could rent from them and let them be on the main lease. If one or both flake out on the lease if all three are on the lease then you are holding the bag.

I am not a fan of partnerships. If I misread/understood I'm sorry. Mike.

Couldn't agree more been involved in several partnerships and all but one ended not well. I wouldn't reccomend it but I'm not saying it can't work for you. Good luck

I think you'd probably be better off finding a shop for $500 plus utilities that you can rent on your own. Partnerships can get messy, and you're also inviting other people IN to your business. If you have to bring in your wife, or brother, you're adding another layer of "partnership" there too.....

I'd avoid it, unless you really NEED the space.

This has red flags all over it for me and you have spelled them out nicely. No good can come of this.
As stated above, if you need a small space start out with a storage unit, making sure it has a power
connection inside. All it needs is an overhead light and you can get a screw-in adapter that will let
you run power. $100-$150 per month and you have space with no obligations, and no lease.

If you need more space, you can always take an additional unit. That's how I started out my scrapping,
and I waited until I could afford it before I moved into my commercial space, and I have no partners
in it with me.

Just my 2 cents.

Sounds to me your doing pritty good as you are. Why not just do as you have been doing, 400-600 a mounth is not bad for a part time income and you wont have all those headachs. Keep up the good work.

Don't do it. You are doing ok right now, so I would carry on as you are until you are losing more business each month than the cost of a storage unit. At that point, get a unit.

If you do this thing I believe you will regret the day you took it on.

I definitely see the point of not getting in over your head, however I think it depends on how far you want to take the recycling business. I see you said you would be the only e-cycler in town, how big of town is it? Also it makes getting accounts and contracts much easier when you have an established location.

Just my two cents!