2 couples running a B&B

[Joey Camb]

lady we have known for a very long time is thinking of going into business with her friend ( 2 women will run the B&B and husbands will carry on working) have asked me for advise - feel this is a disaster waiting to happen.
Things I have pointed out are
(1) who is doing what?
2 - is the money equal etc
3 where will you all live?
4 - getting out - what if one couple wants out? what if one isn't pulling their weight? what if one gets divorced and so on - you need to have a legal document covering all these things so there is no confusion.
Any other thoughts? and does anyone do this successfully? any tips?

 

[Morticia]

How do they split the profits/expenses? Who's on the hook for the taxes? Do they earn a salary? Who gets the final say so in event of a disagreement? (We were advised to NOT have both of us as equal owners, one should be 51%, the other 49%, in the event of a disagreement.)
How do they handle vacations? Sick time? Emergencies?
Who has business experience?
Are the husbands involved or do they shut up and keep out of the business problems?
Definitely do not do this on a handshake. It has to be legally drawn up.

 

[TheBeachHouse]

Create an LLC or corp to pay the taxes. Hire a very good accountant.
Have a legal document making them partners.
I think it could be done like any small business as long as both partners have the same expectation. As you mention, who does what and how do we get paid are the biggest questions.

 

[JBloggs]

Tell them good luck.
It is not even easy sorting all that out with someone you love and have been married to for nearly three decades. Everything in writing, which is what they don't want to hear, because it is all roses. How hard could it be? Possibly losing the shirt off your back will have them draft something up quickly.
If you need words from us for them to believe what you are already telling them.

 

[gillumhouse]

It MUST be with a legal document with EVERYTHING spelled out - Ladies running it, husbands stuff it. Who has final say in a disagreement is vital, who gets what if (when) closes, who contributes what and when and who GETS what and when. Clue them in to Bed Posts. Division of labor - who cooks, who gets toilet cleaning. Who shops, who does marketing. Set it up as a business - Corp or LLC however done there so neither has assets in jeopardy.
Tell them re the lawyer - pay him now or pay him later. It is cheaper to pay NOW.
Good luck.

 

[Copperhead]

This business is like any other, if there are partners there needs to be a legal binding contract between all the parties. And an agreed business plan naming names of who is responsible for what.
Best wishes to them, they will need it.

 

[happykeeper]

We would all love it if this as easy as it sounds, but once they get into the details, they may find that having a corporation may make more sense than not. A board, both of them as employees, a business plan with an accountant, and anything else that is required to delineate the many things involved.

 

[Joey Camb]

they are open to a proper legal agreement but am looking for suggestion of things to cover - want it to be as comprehensive as possible so they have to properly think about what they are getting into before they do!

 

[Morticia]

they are open to a proper legal agreement but am looking for suggestion of things to cover - want it to be as comprehensive as possible so they have to properly think about what they are getting into before they do!.

Who can spend how much without running it by the partner? Who pays the bills? Does the person who pays the bills also balance the books?
Basically, they should make a list of every job and decide who is going to do it. That's the hardest part. They don't know every job yet.
They should separately make a list of their strengths and weaknesses in re that list of jobs and see where the holes are. How much are they willing hire out?
Who gets up at 2am when there are problems?
Where does the money come from when they are short and bills are due? (I know one innkeeper who raided her retirement fund to pay the mortgage in the off season.)

 

[Joey Camb]

they are open to a proper legal agreement but am looking for suggestion of things to cover - want it to be as comprehensive as possible so they have to properly think about what they are getting into before they do!.

Who can spend how much without running it by the partner? Who pays the bills? Does the person who pays the bills also balance the books?
Basically, they should make a list of every job and decide who is going to do it. That's the hardest part. They don't know every job yet.
They should separately make a list of their strengths and weaknesses in re that list of jobs and see where the holes are. How much are they willing hire out?
Who gets up at 2am when there are problems?
Where does the money come from when they are short and bills are due? (I know one innkeeper who raided her retirement fund to pay the mortgage in the off season.)
.

the lady who is our friend is a qualified book keeper so that's a given as she can do that with her eyes shut! but that's what i'm all about - huge list of who does what as I know neither our friend nor her husband are much good at maintenance - what about the other couple? can get very expensive very quickly!
like this week - we tried everything! could not get the light and extractor fan running in room 6 (they are in a combined unit) - had to call the electrician out (we had a few jobs for him so worked out well) however turned out the last one in had turned off the extractor at the ruddy wall! never thought of that and it was the simplest thing!

 

[gillumhouse]

they are open to a proper legal agreement but am looking for suggestion of things to cover - want it to be as comprehensive as possible so they have to properly think about what they are getting into before they do!.

Who handles computer stuff, who cooks, who cleans, checks and balances in place so no one can rip off the other financially, who is the "face" publicity-wise, who is in charge of what area - laundry, shopping, decor, publicity, marketing, reservations, yard, government forms. Spending limits without consult. Who has 51% (remember the hassle Himself gives me on what I consider improvements). Resolution of differences. What happens in case of divorce/death/debilitating illness - who gets what/division of assets as in sale of property or buy-out by partner.
Get them to go to the Bedposts Conference - it is this month I think. They will be able to find out about a lot of things there.

 

[Morticia]

they are open to a proper legal agreement but am looking for suggestion of things to cover - want it to be as comprehensive as possible so they have to properly think about what they are getting into before they do!.

Who can spend how much without running it by the partner? Who pays the bills? Does the person who pays the bills also balance the books?
Basically, they should make a list of every job and decide who is going to do it. That's the hardest part. They don't know every job yet.
They should separately make a list of their strengths and weaknesses in re that list of jobs and see where the holes are. How much are they willing hire out?
Who gets up at 2am when there are problems?
Where does the money come from when they are short and bills are due? (I know one innkeeper who raided her retirement fund to pay the mortgage in the off season.)
.

the lady who is our friend is a qualified book keeper so that's a given as she can do that with her eyes shut! but that's what i'm all about - huge list of who does what as I know neither our friend nor her husband are much good at maintenance - what about the other couple? can get very expensive very quickly!
like this week - we tried everything! could not get the light and extractor fan running in room 6 (they are in a combined unit) - had to call the electrician out (we had a few jobs for him so worked out well) however turned out the last one in had turned off the extractor at the ruddy wall! never thought of that and it was the simplest thing!
.

See, YOU think it's a no brainer who does the books. Your friend might think so, too. The other gal may think she's the one!
So, yes, they need lists and they need to get most of it in hand before they plunk any money down.
Of course they'll learn a lot on the job, but they don't want to learn that no one thought about a website or marketing or who was cooking the breakfast. Because they all thought, "oh, she's much better at that than I she'll do that job."
My daughter asked the other day who does more work around here, me or her father. It's absolutely Gomez. He never sits still.

 

[Lea Ann]

We actually are doing this right now. We each own our homes, we have an innkeeper that stays at the house and does the cooking and cleaning. We take turns with the business cell phone. If the business account needs money we equally put money into the account. If a big decision has to be made we all get together and make it. It's worked out for us.
That being said, out of the four of us I am the only one that is employed full time and I work about 30 miles away. So in reality, the other three do a bit more than I do.

 

[Lea Ann]

We actually are doing this right now. We each own our homes, we have an innkeeper that stays at the house and does the cooking and cleaning. We take turns with the business cell phone. If the business account needs money we equally put money into the account. If a big decision has to be made we all get together and make it. It's worked out for us.
That being said, out of the four of us I am the only one that is employed full time and I work about 30 miles away. So in reality, the other three do a bit more than I do..

I do need to add that we did form an LLC.

 

[JBloggs]

We actually are doing this right now. We each own our homes, we have an innkeeper that stays at the house and does the cooking and cleaning. We take turns with the business cell phone. If the business account needs money we equally put money into the account. If a big decision has to be made we all get together and make it. It's worked out for us.
That being said, out of the four of us I am the only one that is employed full time and I work about 30 miles away. So in reality, the other three do a bit more than I do..

We actually are doing this right now. We each own our homes, we have an innkeeper that stays at the house and does the cooking and cleaning. We take turns with the business cell phone. If the business account needs money we equally put money into the account. If a big decision has to be made we all get together and make it. It's worked out for us.
That being said, out of the four of us I am the only one that is employed full time and I work about 30 miles away. So in reality, the other three do a bit more than I do.

and yet here you are doing research and getting all jiggy wid it! That is why we love you Lea Ann!

PS Every time I read the title of this thread it feels like the intro to a joke... forget the "a priest a rabbi and a...walk into a bar" this one seems better!

 

[Joey Camb]

We actually are doing this right now. We each own our homes, we have an innkeeper that stays at the house and does the cooking and cleaning. We take turns with the business cell phone. If the business account needs money we equally put money into the account. If a big decision has to be made we all get together and make it. It's worked out for us.
That being said, out of the four of us I am the only one that is employed full time and I work about 30 miles away. So in reality, the other three do a bit more than I do..

I think it can be done - but I think they need a BIG place to make it financially viable as well as both be able to live there without killing each other! There is one near me which will be going for a very good price shortly 16 bedrooms and huge basement and will be going for a song due to having gone to the bank that will be up for sale shortly - that would be best for them I think

 

[Lea Ann]

We actually are doing this right now. We each own our homes, we have an innkeeper that stays at the house and does the cooking and cleaning. We take turns with the business cell phone. If the business account needs money we equally put money into the account. If a big decision has to be made we all get together and make it. It's worked out for us.
That being said, out of the four of us I am the only one that is employed full time and I work about 30 miles away. So in reality, the other three do a bit more than I do..

We actually are doing this right now. We each own our homes, we have an innkeeper that stays at the house and does the cooking and cleaning. We take turns with the business cell phone. If the business account needs money we equally put money into the account. If a big decision has to be made we all get together and make it. It's worked out for us.
That being said, out of the four of us I am the only one that is employed full time and I work about 30 miles away. So in reality, the other three do a bit more than I do.

and yet here you are doing research and getting all jiggy wid it! That is why we love you Lea Ann!

PS Every time I read the title of this thread it feels like the intro to a joke... forget the "a priest a rabbi and a...walk into a bar" this one seems better!
.

Ha, JB. You are too funny!