Business partner who is not working but I have financial control - what to do?

Discussion in 'Growing and Managing a Business' started by some1confused, Jun 23, 2014.

  1. some1confused

    some1confused
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    I have a business partner whom I've been working with for several years, however in the past 2 years or so he hasn't done much work as I do ... everytime I told him that he became defensive and claimed he does work and he does do things that I cannot do.

    I have to rely on him on the one hand but on the other hand it might take him sometimes 5 days to respond to my emails and if I call him he is not in the mood to talk for more than 1-2 minutes most of the times, unless if there is an important thing to discuss.

    I quite fed up with this situation ... he is also working now for other places, whilst I'm studying and only working on our joint business ... although we both don't need to put lots of work now as our revenue slumped and I might have to look for another job and become and an employee and stop being self-employed ... I'm also struggling to study to complete my BSc degree, I am in the final stages but having a huge lack of motivation which I cannot explain ... I can spend time watching the World Cup goals or doing other things, but not studying... which is bad but I also don't trust the Uni I study with would help me to gain a (British) 2.1 degree, as it's quite difficult with all that tutor scrutiny that is there...

    So anyway back to the point ... I have control over the finances and my wife has told me to split the revenues 70% - 30% or so because my business partner doesn't deserve to get 50% like old times as he works much less than me.

    What should I do?
    I tried to tell him we would do that, he disagreed, my wife suggested me to simply tell him there are less profits and revenues, this way he would get an "artificial" 30% which I would lie and explain to him it's his 50% or something like that.

    What would you do?
     
  2. Mark T

    Mark T
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    You should start thinking on what options can you do so that you could change this situation. You should talk to him about your business and what are the things that are bothering you which might affect the business.
     
  3. Business Attorney

    Business Attorney
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    That is an AWFUL idea. That can get you in heaps of trouble, both civilly and possibly criminally.

    Unfortunately, I see situations like this on a fairly regular basis. There is no easy solution in most cases. If your "business partner" is a partner in the legal sense, in the U.S. your relationship would be governed by general partnership law. Some people use the term "business partner" to refer to a co-owner where the entity is not a general partnership, but rather is a corporation or an LLC. In those cases, the governing documents may give you more leverage to reach the solution you want.

    If the differences are meaningful to you, you should consult an attorney who can advise you on your rights based on a more detailed review of any documentation and the applicable law.
     
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  4. some1confused

    some1confused
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    Thank you guys ...
     
  5. Aleena

    Aleena
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    Hi
    I suggest you first set up a meeting with him some place nice and peaceful. Then you start talking with him not straight away on the issue but starts with the past working together experience and good moments which you shared together. Then talk about your current situation and make him aware of the situation that you are studying and not even employeed any where else like he is and that a self running business must be kept going as sometimes there are job insecurities. Try to convince him on the point that the person who works more hours will get more profit as that would be fair. Also give a him a chance to speak and listen to him peacefully then talk with him logically on the main issues that you both are facing with your business try to convince him that you both in a need of your own business for future security. I hope that helps
     
  6. Zwillson

    Zwillson
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    I think this is the right time for you to decide if what is your decision about this, you should talk to him about your business and what are the things that are bothering you which might affect the business.
     
  7. some1confused

    some1confused
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    I have met with him just recently, we live in 2 different countries now with huge gap in the time zone in terms of hours, but regardless so far things were not so great when I tried to talk to him and get to improve things.
    I will try to do that again today.
     
  8. allcitycleaning

    allcitycleaning
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    Unfortunately this happens a lot in business. Very hard to resolve. I assume you have a contract or business structure that dictates split of revenue/income so shorting him payments is just looking for a lawsuit. You could try to buy him out of the business or you could quit and start a new business without him. If you want to keep things going then you have to determine split of responsibilities and deliverables so that this does not happen again. If you can afford it I would suggest getting to him to agree to a neutral third party to arbitrate between you. That will keep you from yelling at each other and allow the third party to provide guidance for what is going on.

    Julia,
    All City Cleaning

    PS - In the future avoid these kind of partnerships.
     
  9. afia_kamran

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    You should talk to your business partner first but don't let him know that you're planning to break up. And after that go for an equal distribution. He should get for what he has invested (his money, work, time or whatever) and you should get for your's. It should be just for both the parties. I hope nobody wants to end up in court so it's better to be just.
     
  10. Terry Hopper

    Terry Hopper
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    I think you can try to understand of your partner. And tell him the important if your business. At least if you could not understand him then you have to leave him and find a new partner.
     
  11. sigma

    sigma
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    The simply way is giving out the salary other than the revenue sharing.
    You take the salary from the company monthly, and then both of the share holder share the revenue/profit end of the day
     
  12. mohanshukla

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    I think you should talk to him about the situtaions that are bothring you.According to me you have 3 option to fix problem.

    1. You can convenience him to work like before 2 years.
    2. As you write If you are doing more work then him,Ask him for some salary for extra work.
    3. You can break the partnership.
     
  13. some1confused

    some1confused
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    Things unfortunately not improving with him ... he barely replies to emails or does what he needs to do.
    Lots of close people I discussed it with suggested to pay him smaller salary than what I take because otherwise it would be unfair towards me, as I do my utmost to save and make the business prosper and he does nothing or very little beyond minimum to help the business.

    What's your take on this?
     
  14. allcitycleaning

    allcitycleaning
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    You are being very hopeful here. The only recourse you really have is to buy him out or have him buy you out. You will never be happy with his performance, trust me.

    Julia
    All City Cleaning Service
     
  15. some1confused

    some1confused
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    Thank you Julia ... how can I buy him out? DO I need to pay him for that?
     
  16. allcitycleaning

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    The two of you have to decide how much the business is worth. I hope you each know how much of the business each owns. probably 50/50. Right? So to buy him out you would need to pay him half of the valuation. Of course he has to want to leave the partnership. And you will have to have a lawyer draw this up or you will be sorry. Good luck with it.
     
  17. jaynorth

    jaynorth
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    Well if you are not getting any useful solution, then it is high time to get rid of this partnership, which is not at all bearing any positive result so far. That is why, it is better to consult with legal representative to find solution to dissolve such partnerships.
     
  18. Valentine

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    Well, i frankly suggest you consider dissolving the partnership. Please dont short pay him. If you have a partnership deed, then doing anything outside this deed is unlawful. Since you do most of the leg work, then i also suppose you are in touch with most of your customers. The best advice i can give you is to break the partnership, start up a new company and try to win back your current clients. Am sure they will gladly continue to do business with you. That way you get to keep the profits 100%.
     
  19. some1confused

    some1confused
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    Hello again everyone,

    I wanted to give you some updates for this thread since I started it in June 2014.
    I've been reading this thread again and I believe you were not aware of how this situation is between us at the moment, legally speaking - so please let me explain:

    • We are not US based, we never had an official partnership between us that is registered - we only had it once with a company that we already closed and is dissolved already. The "official" partnership we had no longer exists.
    • We signed many years ago on a piece of paper that saying we would split 50%-50% but I believe the paper also said we DEDICATE 50%-50% efforts as well .... likewise this paper was signed only between us, no lawyer involved, nothing.
    • As you can appreciate as it stands he opened a company on his name etc. several years ago but due to lack of management of this company properly from his end the bank closed the account - it caused us lots of inconvenience back then in 2013.
    • What happened in 2013 is that I opened a company 100% on my name because I'm much more responsible, he is not even listed there, and this company until nowadays is receiving all the income from the business.
    • He legally and technically has no connection to the business - he is not even listed in the company as shareholder or anything - so officially he has no connection to the company.
    That is why my wife suggested that I take 70% and he gets 30% of the business profits - or something like that.
    Why?
    Because he is not even looking at the monthly stats, he has no access to the bank, and he doesn't seem to care about it ... I am sending him the monthly "salaries" (or dividends or however you wanna call it), I do it because I still see/saw him as a "business partner" but I'm quite fed up with the way he's been treating the business and myself as well ... he came from overseas and we scheduled to meet even though I have an important exam and then he just cancelled and not even sure he even wants to meet - he just doesn't give a damn, literally.

    I am about to finish my degree in 2 weeks now, I wrote about it in the beginning of this thread that I struggled a bit but I had such an excellent tutor that helped me so much and I am feeling motivated to finish the degree now with good scores hopefully - and likewise I already got a very good job offer and probably would receive the work contract today as well to start after my last Uni's exam in 2 weeks approx.

    I'm even thinking of telling him that I'll start a job because he doesn't give a damn - and because of that the business profits are going to "drop" (and I will do my best they won't drop) - and he would get less profits from the business - the more I think of it the more I think that is the only way to "give him a taste of his own medicine" - what do you think?
    You wrote to me before in this thread it's risky and things like that - but legally it's not risky....

    I'm not concerned legally because legally he is not related to the business - I am thinking more in the moral aspect here - is it morally okay? Forget about the legal aspects that don't even exist here - I'm asking if morally is it okay to do that? To give him say 25% of the business profits and I will take 75% because that is truly reflecting what we put into the business?!
     
  20. 60degreeDigital

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    If he is not contributing, what's the point in giving him any kind of share. As aforesaid by you that both of you don't have any kind of legal obligations, then why to keep continuing with him. IMO, you should go with your own guts. Have your own business where you are the only one who bares the fruits of his own efforts.
     

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