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Ask Dave

Bad Partnership

Austin shouldn't buy into a business partnership where he'd have to bail his potential partner out of debt.

QUESTION: Austin is 23 and was offered a partnership with his high school job (a farmer’s market) and needs some capital to buy into it. His potential partner is in debt to his brother and needs some money to make that right. Should Austin do this?

ANSWER: Don’t do it. If he wants to free up his time, he can share some of the net profits with you. That could be your pay scale. If this guy needs a 23-year-old partner, he’s limping. That’s not to put you down, that’s a general statement. You don’t need partners or debt in business.

If I were you, I’d ask him to cut you in on some of the profits, and maybe a little bit of ownership. But don’t borrow $50,000 to bail him out of business with his brother. You would buy into a weak business and you don’t want to buy into a weak business, and you sure don’t want to take on a bunch of debt.