Help - Business Partnership Issue

Discussion in 'Growing and Managing a Business' started by dmrobins, Mar 28, 2013.

  1. dmrobins

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    Mar 28, 2013
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    Pete, Roy and I have been friends and coworkers for about 10 years. Pete and Roy were friends prior to me starting at the job we now share. As our careers have progressed, both Pete and I have grown into management roles where we each manage separate sites for our company. At my location, I function as Roy’s manager. Unfortunately, Roy has never been able to grow into a position of higher responsibility due to not being a self-starter and due to health conditions that have limited him. Likely if Roy had not worked with/for me, he would have been fired long ago.

    About 2 years ago, Pete decided to hire Roy’s brother Rick at his location. Rick has done very well in the business, has become well respected, and lacks only experience to move up in the business. Both Pete and I consider Rick to nearly be our equal.

    Because we get along very well and see the need for our skills in ways that our business doesn’t address, Pete, Rick and I have decided to start our own business. At our first meeting to discuss the venture, the idea of Roy being part of the business was discussed, but Pete and I felt it was not a good idea. We also discussed that it would be difficult for Rick to tell his brother about the venture because it could cause discord in the family. The resolution to this was that Roy would not be part of it and each of us would have a 1/3 stake in the new business.

    At the next meeting between the 3 of us (Pete, Rick and I), the idea of Roy being involved was again brought up. Pete and Rick had discussed this further without my presence. They presented an idea where we would involve Roy as a partner with a 10% share, such that the rest of us would have a 30% share. Along with this, Roy would be one of the partners and be involved in the executive level of planning however would have little voting power due to his 10%. Later as we discussed start-up funds, Rick offered to cover Roy’s portion because he couldn’t afford it. There was more discussion about this, but basically Rick feels like he needs to include his brother and Pete feels like he needs to include him because of their friendship.

    Just today I spoke with Pete and asked him if Rick said that he wouldn’t be part of the business unless Roy could be a partner. Pete told me that Rick hadn’t said it, but felt like that is what he is thinking….

    Here are my feelings on all of this:

    1. Bluntly put, we are trying to start a for-profit business not a charity. I would like to take care of family and friends, but think we will be in a better position to do so with a strong business and equal partnership.

    2. I think Pete may have been influenced by Rick’s apparent decision to not participate without his brother. If this was the case, then I would always feel like the 4th wheel in the partnership.

    3. I feel like Roy would not be an equal partner, even at 10% share. He is nowhere near our equal in terms of skill, productivity or motivation. I would always be concerned with entrusting him to interact with clients and completing work as required.

    4. On the flip side, although I am against including Roy in the business, I think not including him could have a bad result. Roy could be hurt badly by all of us. It could affect our friendships and further affect performance in his current job. All of us plan to maintain our current job indefinitely until this new venture is more developed.

    5. I am concerned that this could progress to the point where I would have to make a decision to be part of it with Roy or not be part of it at all. I hope it doesn’t come to that and fear that if I decide not to be part of it our friendships could also be affected.

    So, how do I voice my concerns in a clear way that objectively addresses the issues? Are there other potential pros or cons that I am not seeing here? Should I stay involved if Pete and Rick decide that Roy needs to be involved? I am I making this a bigger deal than it is?

    Any advice would be greatly appreciated.

    Thank you.
  2. scifi

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    Nov 2, 2008
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    Have any one of you discussed with the Roy and tried to know his's better to tale to Roy rather than guessing speculations on his behalf.....

    He must be aware of his limitations and skills, I think you will get solution while discussion with Roy itself...

    Don't think ....tell him calmly your plans by taking him into confidence.....friends can be much better than you think when it comes to matters of friendships......:)

  3. Ted

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    Jan 2, 2013
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    My advice….

    Based on your opinion of Roy right now, I would say that there is no way you should allow him to be part of the company.

    If you want to give your business the best chance of success, you need to have your core management team be comprised of skilled people who can fully commit to the project with long hours, whatever it takes to succeed skills and attitudes.

    Based on your description of Roy, he doesn't fit that profile. So, you definitely should not have him involved in this business at all. In fact, if he isn't reliable for whatever the reason, I wouldn't even hire the guy to work for me. He might be a nice guy, but business is business.

    The real core of your problem here is that Rick & Roy are brothers and that Rick feels like he is somehow betraying his brother by leaving him behind. That is the core issue. So, what you need to do is figure out how to alleviate this feeling of betrayal in Rick so that the three of you can pursue this business venture.

    Here is one possibility where you can do that.

    Find a way to get into a private conversation with Roy. Just you and him. Take him out for a drink after work or take him out to dinner or whatever. Explain the situation to him. Tell him that you don’t personally feel like he should be involved in the business because of his shortcomings. It sounds like he is already aware of his own shortcomings.

    Explain to him that you want to involve his brother Rick, but that Rick is ultra loyal to Roy and will likely not participate in the business without bringing Roy along with him. Explain that this is a real opportunity for Rick to advance himself and that his own feelings of guilt will cause this business partnership to dissolve before it even starts.

    If Roy is a standup guy, he will insist that his brother go ahead without him being part of the project. You will basically be taking away Rick’s guilt and placing it on your shoulders instead. That works because you don’t care to have Roy involved. Therefore, even though Roy might think less of you and your personal relationship with him, he will absolve Rick of his need to feel guilty.

    If you don't like my suggested approach, then find a different way to alleviate Rick's guilt. If you can't do it, then walk away from the deal.

    Personal Story – I have hired friends and friends of friends to work for me in the past as employees of my company. It was a mistake. You would assume that they care more about the job because of their personal relationship with you. Believe me, they won’t. Even when you think your friendship is strong, the employer/employee relationship supersedes it. They will still be coming to work just for the paycheck. You will be too lenient with them because of your personal relationship. It just gets in the way of conducting business. Almost every single business owner I talk to who hires someone like that who is an employee’s brother or cousin or whatever, ends up regretting it. There is no way in hell I would let myself get forced into a business partnership with someone like that. No way!

    If I was you, I would make it clear that you have no intention of entering into a business partnership with Roy under any circumstances because you simply don’t respect and value his abilities enough to ever make that kind of commitment with him. If those guys try to force you into it, then I think you are better off walking away from this business entirely. That is my honest opinion. If you agree to partner with him, your partnership is almost certain to fail.

    Why put yourself through that? You don’t want to create that kind of problem for yourself.

    Building a successful business from scratch is way hard enough as it is. Why handicap yourself from the start?
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