wat ar the advantages and disadvantages of running a restaurant as a partnership?

Answer 1

Advantages:
- Added knowledge and financial resources
- Shared workload
- More balance in strengths and weaknesses of owners

Disadvantages:
- Added bureaucracy limiting the businesses ability to quickly react, and sometimes forcing stalemates on important issues
- Greater strain on cashflow to owners
- Confused chain of command for employees
- Differing views on strategic planning of the business

This is a short list, but my point with it is that the disadvantages of a partnership outweigh the advantages in a traditional partner relationship.

Does that mean it's always a bad idea to form a partnership? No.

The disadvantages of partnerships can be neutralized through proper structuring of the business and the roles of the partners, solidified by a legal partnership agreement.

To eliminate the troubles caused by added bureaucracy, a confused chain of command, and differences in strategic thought, partnerships should separate the duties of running the company by way of a complete organizational chart and assignment of the responsibilities for each position in the organizational chart. Ultimately, one person has to have the final say so. One person has to be the CEO of the company, whether there are two partners or ten partners. If none of the partners can be trusted to be the CEO, and have the tie breaking vote on all issues, the business as a whole is doomed from the beginning.

The remaining positions in the organizational chart should also be assigned to one of the partners based on their particular strengths and weaknesses. While the CEO has the tie breaking ovote on major issues, it may be understood that another partner is much stronger in the marketing department and should lead that part of the company. Eliminating the need for consensus in each of the major areas of running a business will greatly increase that companies ability to react and grow.

As far as the cashflow strain, this issue is resolved by raising enough money in the founding of the company to support each of the partners who are dependent on the company as a source of income, without drawing money out of the company. For single owner businesses, it's always advisable to have 1 years worth of personal income saved, and 6 months worth of business expenses. For partnerships, there needs to be 1 years worth of personal income saved for each partner, or alternative sources of income outside the business.

Brandon O'Dell
O'Dell Consulting
Restaurants/Retail/Bars
[e-mail]
http://www.bodellconsulting.com