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Tools for Teachers

How to Open a Yoga Studio Part 5: To Partner, Or Not to Partner

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two yoga moms partner pose forearm stand

You’ve decided to open a yoga studio. Can you do it by yourself? Do you even want to try?

First, acquaint yourself with the nitty-gritty of small business legal structures, which essentially comprise what are called sole proprietorships or, if more than one partner is involved, partnerships; limited partnerships; limited liability companies; and nonprofit corporations. The better informed you are, the better able you will be to decide whether to take on partners in your endeavor.

A sole proprietorship or a partnership is a business that is run by either one person (or two or more people in the latter case), who don’t need to file any paperwork and whose arrangement begins as soon as they swing open a new business’s doors. The advantages: it’s easy as pie to get started. The disadvantages: in sole proprietorships or partnerships, the owners pay taxes on their shares of the business income on their personal tax returns, and each owner is personally liable for the entire amount of any business debts and claims. In other words, in the event that a student decides to sue you, you could lose not only your business but your personal assets.

A limited partnership is created by a person who becomes its “general partner” or the person who solicits investments from other people, who are considered the business’s “limited partners.” The GP, as they say in investment speak, runs the limited partnership’s day-to-day operations, while the LPs are the equivalent of silent partners, with little or no control at all. The advantages: the GP gets to run the show while resting assured that he or she has financial backing. The disadvantages: Because the LPs have almost no control, they aren’t liable for the limited partnership’s business debts; the GP is (unless the GP is an LLC, but more on that in a minute). Another disadvantage: it’s a little complicated to set up.

A limited liability company (LLC) is the most costly to set up (a disadvantage), but it’s worth it. LLCs limit the owner or owners’ personal liability for business debts, as well as court judgments against a business. In short, the LLC is an independent legal and tax entity, separate from the people who own or control it. As a result, the business owners don’t use their personal tax returns to pay tax on corporate profits – the LLC does.

Last are nonprofits, which are corporations that carry out either a charitable or educational purpose. (At a yoga studio, a nonprofit might offers teacher-training scholarships or offer free classes to the unemployed or military veterans.) The advantages: A nonprofit can raise funds by receiving public and private grant money and donations from companies and individuals, plus federal and state governments generally don’t tax nonprofits on the money they make relating to their nonprofit purposes because of the ostensible benefits of those services to society. The disadvantages: you’re probably never going to make a killing with a nonprofit.

Of course, before you set up an appointment with a tax attorney to learn more about the aforementioned, you should seriously consider the personal pros and cons of sharing a business.

If your vision for a studio centers on simplicity, then managing your business single-handedly will likely work best. Clayton Horton, who launched Greenpath Yoga in San Francisco two years ago, was deprived of making the choice of whether or not to partner, but he’s happy that he was ultimately left to his own devices. “I’d been talking with someone about partnering and they bowed out, but it was a blessing.” Says Horton, “it would have complicated things when I needed them to be very straightforward, especially at the beginning.”

If you believe that joint ownership of your business will further its chances for success, you’ll want to decide which will best suit you: a silent partner, who merely provides you capital, or a hands-on partner who is with you in the trenches on a day-to-day basis. Not surprisingly, the latter can be far more challenging. Says Baron Baptiste, founder of the Baptiste Power Yoga Institutes in Cambridge and Boston, “Going into any business partnership is like going into a marriage, but hands-on partnerships are much higher risk, and present much greater potential for problems. Very often, once the honeymoon is over, you start to see unpleasant personality traits or work ethics or you just discover that you have different visions with regard to how to raise the kid, so to speak.”

Baptiste knows of which he speaks. He has opened five studios in his career and has enjoyed both silent and active partners. His advice: don’t walk down the altar with someone you don’t know excruciatingly well. More, if you do take a partner, make sure that you are doing it for the right reasons. “At every teacher training, I bet there are a dozen people who consult with me privately on how to mediate or resolve partnership problems,” says Baptiste. Typically, he says, it’s because they’ve gotten into their relationships owing to insecurity, such as around their own business acumen.

Yet not every partnership is an unhappy one. Sometimes, it’s just a matter of working out the kinks. Ian Lopatin — a cofounder of At One Yoga with studios in Scottsdale, Phoenix, and Grayhawk, Arizona — has two active partners in the business and says that for him, the benefits of cofounders outweigh the disadvantages as his enterprise grows. “At the beginning, it’s tough. There are lots of mouths to feed and as is typical when you start a business, you’re the last people getting paychecks.” Lopatin recalls that at the outset, it was also difficult to reach a consensus on every issue. “Everyone sort of checked in with what they wanted. It was complicated at times.”

As his business has evolved, he has come to appreciate his partners more. “Working with partners has helped create a sense of community. It’s great not having to do everything, too, especially as the business and its needs grow.” An added benefit of time: the partners recognize one another’s strengths and each now makes executive decisions when circumstances necessitate them within their particular area of expertise.

There is no one setup that is best for all yoga studios. Whether you’re better off launching your own business or co-founding one, and whether you choose a simple or more complicated organizational structure, will depend on many factors. Again, your best bet is to do some soul searching. Then speak with a professional who can help you to sort out the particulars.

Constance Loizos is a San Francisco-based writer whose work has appeared in more than a dozen magazines, including Inc., Fast Company, and San Francisco Magazine. She is currently writing a book about businesswomen.