Question:
I intend to start a small retail business, selling various giftware and books in a small town of about 1000. There is already another business in town which sells something similar and the owner has heard of my plans, through a mutual supplier. The owner of this store now has approached me about buying into my business instead and although I initially thought it would a good idea, I’m now having second thoughts, particularly as I do not know whether I could work with this person. Is the owner only doing this because of the threat my business could be? How can I involve this person in my business but not make her a partner or part-owner?

Answer:
Well, if she is not going to be a partner or part-owner, the only way to “involve” her would be as an employee. I would be suspicious though of why she wants to join your business if she has pretty much the same one already, particularly as she doesn’t know yet what sort of competition or threat you are going to be, if any.

It could mean her store is in financial difficulties and you may want to investigate that further before starting your own business. It could also be that a town of 1000 may not be enough to sustain the type of business you are thinking of, let alone two.
You will need to do some careful research first and prepare a thorough business plan. Your other option is for you to buy her existing business but again, you should thoroughly investigate it.

Filed under: Starting a Business, Buying & Selling a Business
This page was added on 29 January 2002, last updated on 28 October 2006.