Going into business

[Barry44]

Having had my 61 acre woodlot "assessed" by a rep. from the Cornell Extension office, as well as his two associates, it appears I have a potential of over 2000 taps when all is said and done. This will go beyond hobby in a couple of years and will obviously need some committed help. My brother is very interested in shouldering up with me on this endeavor. I own the property and at this time have no other equipment, just a lot of ideas. THe plan is to tube/vac/ro as money allows. I've also consulted a CPA who sat up straight with the idea of going into business with family and advised me to draw up a very specific contract. Any advice and or opinions on how to fairly cut my brother in with the assumtion that we will go 50-50 on all equipment, and remember... I already own the land. Thanks

[maple flats]

How do the two of you get along? Have you ever worked together?
I worked with my brother as a partner for almost 24 years. We had no problems, BUT I have heard horror stories of family partnerships that failed because it was not 50/50 in the work/investment aspects. If you get along well and do not get angry with each other, it can be a good relationship.
I would suggest you come up with an agreement for the land lease that the partnership will pay, and it should be more than the taxes since you are also losing eventual logging values. I think maybe 80% of the going rate per tap for leased land. That is a number you will need to agree on beforehand as to how that number will be determined. As an example, in 08 I paid $.45, in 09 and 10 I paid $.50 and this year (and next) I pay $.75 per tap. The rate may stay at 75 for a while, not sure. My lease specifies the 2012 rate at $.75 and after that it is tied to the inflation (deflation?) rate as determined by the Social Security System for subsequent years. You might just use the prevailing rate from a certain number of local producers or anything else. Get it in writing.
Beyond that have an agreement that all investments in equipment or supplies will be 50/50 and also the all labor by the partnership shall also be 50/50. Agree that any record keeping or any bookkeeping shall be split 50/50 or the time one spends doing the books shall be balanced by the other partner in other labor. Do not make a distinction that any one chore is worth more than any other, an hour is an hour.
Also have an escape clause for how to have one buy the other out if the partnership fails but one partner wants to continue as sole operator.
Partnerships can work well or be a real bad experience, most of it is determined by the cooperation between the partners. Ours went well and as long as your personalities don't clash yours should too. It takes work but it can have it's rewards.

[metalhead62]

wow maple that was well said and well thought out with alot of good info.i think uve done that before well done

[Kev]

Even if you do not mesh as well as you thought you would. If you follow Maples advice, you can still make it work.

[maple flats]

This morning as I laid in bed thinking about getting up (at 4:30) I thought of another tap lease rate that might make more sence and be more relavent. Make the rent/tap related to the bulk price for say Med amber per pound at a specific date each year and at a specific buyer or set of buyers. Set a date because such prices are fluid.
If you don't mesh I would not go into the partnership. Friction within any partnership will tear it apart.

[adk1]

This happens often in the sugarin business. ITs hard to reach out and rely on non-family for investment/commitment into a sugarin business. For both sides of the fence.

[Barry44]

My brother and I do get along quite well, I do not believe it will be an issue. I guess I imagined that because I alone footed the bill for the property, some how that entitled me to a greater split in the business. However, if we form a partnership and lease the trees from my wife and I.... and reality is if I didn't want to start this business, that would be the best I could do which is lease taps to a producer. Because the shack will be on my property, I'm thinking I will probably have to assume the bill for building it. We both need to protect our interest in anything we put into this venture. Thanks M/A.