Time to Team Up

Laura Beaver is aiming to expand her two-year-old business, New Horizons Hardwoods Inc., and she’s hoping an infusion of shareholders – and their experience – will help her reach that goal.

Springfield-based New Horizons Hardwoods was founded in late 2007 and imports hardwoods from Ecuador. Joining Beaver at the shareholder table are Sheila Collins and Paul Reinert, as well as Jim Gordon, who Beaver said helped her start the business but had stepped back from ownership for a while.

“There just isn’t enough of me to go around, and Jim spends a lot of time in Ecuador,” Beaver said. “The four of us complement each other with our various skills.”

The ability to mesh different capabilities is among several reasons small-business owners might take on partners, said Rayanna Anderson, director of the Small Business & Technology Development Center at Missouri State University.

“They primarily probably have a financial need or critical business need (for) knowledge,” she added.

Ready to branch out
Beaver wouldn’t disclose the percentage of ownership the new partners took on or the financial arrangement, though she noted that all the shareholders did bring equity to the company, which remains majority female-owned.

In its first year, Beaver said, New Horizons was focused on building its infrastructure, and in 2009, the company imported two containers each with 10,000 board feet of wood from Ecuador. This year, she hopes to bring over three to four times that much, and to expand into other markets in the U.S. and abroad, perhaps by buying and selling reclaimed materials.

And that’s where insights from her new partners come into the picture.

Collins, the former owner of Springfield Granite-Plus, has a manufacturing background. She sold Granite-Plus back to previous owners Scott and Tracy Hardwick last summer after filing for personal bankruptcy. The company now operates as The Granite Source of Missouri LLC. In July 2009, Collins told Springfield Business Journal the slowdown in the construction industry led to the bankruptcy, but she doesn’t think the sale or the bankruptcy would have any bearing on her work at New Horizons.

“I’m well known in the community, and I have a successful track record in business,” Collins said.

Reinert, a co-founder and co-owner of Integrity Home Care, isn’t involved in the day-to-day operations at New Horizons, Beaver said, but he brings his accounting background to his role as treasurer of the company. Plus, she noted, Reinert has a passion for South America and speaks Spanish.

Eyes on the future
Tucker & Co. PC President Joe Tucker has been the sole practitioner in his certified public accounting firm since 1987, but three key factors led him to add two shareholders in January.  

His first reason is growth – he said the firm has grown by at least 8 percent annually for the last five years – but he also cites the relative youth of some clients as well as a desire to ensure the firm’s survival if something unexpected happens.

Joining Tucker as shareholders are CPAs Jeffrey S. Schmitt, 29, and Stephen R. Gintz, 34.
Tucker, 55, said he has some clients whose offspring are starting their own businesses, and they might want to work with Schmitt or Gintz.

“Younger business owners can relate to younger advisers,” Tucker said, noting that the partnership will give Schmitt and Gintz a chance to develop their clientele and grow along with them.

“They are also plugged into the younger business organizations,” he added.

Other perks to the partnership, Tucker said, are Schmitt’s strong people skills and training in QuickBooks Pro, as well as Gintz’s experience in taxation, trusts and estate planning.

“We will all wear many hats, but by bringing them into the owner structure, we each have strengths and talents that will allow the firm to continue to expand,” Tucker said.

Anderson said creating partnerships where skill sets aren’t duplicated is a good idea.

“The best types of partnerships I’ve seen are the ones where the new partner is bringing a distinct knowledge or talent and they benefit each other,” she said.

Tucker, who retains 51 percent ownership in his company, said the goal is to transition to equal ownership within five years. He said even though he’s brought younger viewpoints on board, he’s not ready to retire.

“I feel even more energized now,” said Tucker, noting that he will oversee operations and continue developing new business.

Plans and pitfalls
Regardless of why a business owner chooses to bring new partners in the mix, attorney Glenn Green of Lowther Johnson Attorneys at Law LLC said there are myriad partnership structures that can be put in place to protect all parties.

Those include a simple partnership, which isn’t a formal corporation, to a limited liability company or a professional corporation

“I usually discuss with my clients the type of business they have and what their objectives are in minimizing liability and their tax goals,” Green said, noting that most of his clients form LLCs because they are flexible for business types as well as taxation.

“I would advise anyone thinking of setting up a partnership or corporation to talk to their tax attorney and to their CPA,” Green said. “I generally work with my client and their CPA, or if they don’t have one, set them up with a CPA so they can take a look at the different requirements for their status.”

MSU small-business adviser Anderson said it’s also important for business owners to understand that partnerships can change individual relationships.

Legal structures aside, she said it’s important to have in place a written agreement that clearly outlines each partner’s role in the company.

“I always tell people when they go into a partnership, they may be friends now, but they may not be friends later,” she said. “I have seen some successful partnerships, but I’ve seen a lot of unsuccessful ones.”