Setting up in business with a friend or colleague sounds an ideal proposition, making money while having fun. But the reality is different, as Ben Cook discovers when he interviewed the partners of three broking firms who started out together

Business Insurance Solutions (BIS)

Established in 2001 by Steve Lynas and Charles Sunter, this Halifax broker specialises in providing business cover – ranging from professional indemnity to motor fleet insurance.

Managing director Steve Lynas fulfilled a lifelong ambition when he set up the company with Charles Sunter. “I’d always wanted to run my own company ever since I can remember,” Lynas says.

He had worked for nine and a half years at Halifax broker Wilby, where Sunter also worked in the financial services team dealing with pensions and investments. Lynas and Sunter decided to set up a company together because they had built up a good rapport in their time as colleagues. “We worked together anyway and we got on quite well,” Lynas says.

Establishing the business turned out to be problematic due to turbulence in the financial markets. “It was extremely difficult to set up,” Lynas says. “It was after 11 September, the stock market crashed and insurers didn’t want to deal with new businesses.”

Forging links with underwriters also proved troublesome. “The main challenge was getting agencies with insurers,” Lynas says.

He adds that the business was ultimately successful though due to a “robust business plan”. However, it only got off the ground following an initial period of struggle. “For the first 18 months, it was difficult to write business.”

What were the advantages of setting up the business with a partner? Lynas highlights the fact that it meant there was greater input when it came to planning and finances. “It was shared ideas, shared responsibility, and shared income and expenditure,” he says.

Lynas adds that having a partner also meant he had additional support, guidance and experience to help him overcome any obstacles. “It [having a partner] was like a crutch. I did A-levels, but didn’t go to university, I was quite green, I was only 27,” he says. “He [Sunter] had clients and he had a car – I didn’t have a car at the time.”

However, though the company was successfully established, the partnership between Lynas and Sunter was brought to an end in 2007. This was due to the partners having different ideas about how to develop the business. While both successful ‘

‘ in their own right, Lynas and Sunter wanted to take different approaches to employing staff and managing finances.

Lynas says that he and Sunter were effectively “two companies set up under the same group banner”. To enable each partner to progress independently, Lynas and Sunter went their separate ways with Lynas remaining at BIS. “We dissolved the partnership last year,” Lynas says. “We sold the building and took our respective clients.”

Lynas is now in sole charge of BIS and has the power to make all decisions independently.

Would Lynas form a partnership again? “No, I want complete autonomy,” he says. “When you are in a partnership, you always have to run things past people.”

“When you are in a partnership, you always have to run things past people

Steve Lynas, BIS

Lynas acknowledges that, when he formed the partnership, he benefited from shared ideas, responsibility, income and expenditure, but he adds that, before he took the plunge and set up with a partner, people tried to put him off the idea.

“When I started down the road of partnership, I was always discouraged because you do see many partnerships falling out.”

The Insurance Partnership

Established in 1993 by Ian Hakes, Rob Worrell, Les Reveley and Malcolm Douglas, this broker – with offices in Hull, York and Sutton Coldfield, West Midlands –offers a range of insurance services including identity theft cover, event cover, business insurance and risk management.

The four partners responsible for forming The Insurance Partnership did so in response to plans to close the Hull and York offices of the broker Minet, which is now part of Aon. The founders all worked in the Hull and York offices and were unhappy about Minet’s plans to relocate the two offices to Warrington.

What particularly rankled, according to Rob Worrell, managing director of the Insurance Partnership, was that the four partners felt they had successfully developed the business in Hull and York, and were confident that they could enable it to flourish, he says.

Worrell says the benefit of the four partners going into business together was that they all brought different skill sets – including strong communication skills, enthusiasm and IT expertise – to the table.

In addition, the founders also had great confidence in each other’s abilities. “We trusted each other,” Worrell says. “We were friends and the sum of the parts was a dynamic team.”

Establishing the business was a tough challenge, according to Worrell. Because the partners were leaving Minet, they had to overcome a number of legal obstacles.

Another problem was the lack of finance. “We started with no capital and we’ve never had an overdraft,” says Worrell. The lack of cash meant the fledgling firm had to negotiate deals for office space which minimised its financial outlay. “We had our first premises for three months rent free because we agreed to decorate it.”

Worrell adds that The Insurance Partnership also benefited from some highly committed staff in its early days. He highlights the work of two sisters – the company’s first employees – who worked extremely hard for little money. The partners also initially took no salary as they attempted to get the business off the ground. “We weren’t paid for many months,” Worrell says.

But there were many benefits of working in a partnership, according to Worrell. “It meant flexibility, trust and, as there were no external shareholders, quick decision-making,” he says.

Worrell adds that there were no disadvantages to being in a partnership, other than the fact that “one or two corporate clients felt there was more gravitas dealing with a limited company because they could see our accounts”.

Worrell believes working as a partnership also meant the staff were very committed to making the business a success. “Nobody ‘underworked’ and we still have common goals,” he says.

“We had our first premises for three months rent free because we agreed to decorate it

Rob Worrell, The Insurance Partnership

He adds that because The Insurance Partnership is now a thriving business with 135 employees it shows that it was a wise move to set it up. “I was always told that partnership equals hardship, but I’m pleased to say that our results to date suggest not.”

Lucas Fettes & Partners

Established in 1980 by Robin Lucas and David Fettes, this broker operates from nine locations in the UK, including London. It places a wide range of covers including property, professional indemnity, medical malpractice and marine cargo.

Lucas and Fettes were running their own businesses when they were introduced at a badminton tournament at the Albert Hall in 1979. Lucas was working in general insurance, while Fettes was an independent financial adviser.

Lucas and Fettes hit it off straight away and “by the end of the night, we were doing business”, Lucas says.

Among the motivations for the partnership was the fact that Lucas and Fettes got on well together. In addition, they wanted someone with whom to discuss strategy and planning.

Lucas says: “We needed someone to bounce ideas off, and he [Fettes] is someone I’m very fond of.”

Establishing the business posed a considerable challenge, and Lucas admits he might have had second thoughts about the idea “if someone had told me how hard the first 18 months would be”.

“We had no money for 18 months. We existed on nothing; we had no carpets.”

Lucas says being in a partnership meant there was someone who could help him surmount any difficulties. “Having a partner meant there was someone to discuss problems with,” he says.

A key element of the relationship with Fettes was having compete faith in him, says Lucas. “It’s a case of trusting him implicitly. There are funds that need to be looked after. It’s about being 100% honest [with each other].”

Around 15 months ago, Lucas Fettes & Partners became a listed company. Lucas says this means that “when insurance companies are looking at you as a credit risk, it gives you more substance”.

Lucas and Fettes originally set the firm up as a limited company. “In a partnership, you are personally liable, but as a limited company, you have limited liability – there are also tax advantages.”

In November of last year, it was announced that David Fettes would be retiring – 27 years after co-founding the firm. He continues to act as a consultant to Lucas Fettes – working an average of one day a week. Lucas says he still has a very good relationship with Fettes.

What is the key to a successful partnership? Lucas says: “The thing that kills partnerships is politics. You should keep politics out of it. There should be no dishonesty, no trying to get one over each other, no trying to disadvantage each other, and no talking behind people’s back. Also, there should be no bitchiness – we want none of that.”