Business partner or not (Sorry it's a little long)

[singleowner]

Situtation: Started small ebay business with friend. Originally, we were both full time engineers, however, we both wanted out of the business to pursue the new business. Best case senerio happened which had been previously discussed; I would take a voluntary lay-off since we were slow at work; combine her salary, my unemployment and profits from ebay business, in turn, I would start networking around town and doing all of the work from the ebay business. The lay-off happened on this past Friday, a very big client from ebay was to come by on Sunday to look at our proposals. I received no help from her in the two weeks leading up to client coming and she had missed 3 deadlines with other clients, me missing none. This client could skyrocket our business as her wedding will be featured in a very important magazine! Our business is hand painted aisle runners as well as wedding cakes. I made four examples of different aisle runners (approx. 10+ hours easy), co-business owner spent an hour on the cake; cheated big time. I didn't like that. After said client leaves, I start asking how she wants to work the money situation. I am getting unemployment, I'm suppose to pay my bills, plus drive around town and network for our company and still split the business money 50-50 when I've already done about 6 more runners than she has yet has still gotten the 50%. She is my best friend, so what I'm trying to figure out is how to get 100% of the business and keep my friendship. She has no concept of time regardless of anything, I'm the one who when someone calls and says "Oh I forgot about this can you get it done in two days" who is staying up until 2:00am to make sure it's done. Our product speaks for itself and people who go these weddings will be asking where they got it. She is not an equal partner because she doesn't do equal work and if I'm networking and bringing in the business, why does she think she's entitled to half the profit when she won't give 50% now. I could go on and on.....
How do I get save the friendship, but have this business to myself? This is my first week off and I'm not networking because after I have the talk with her, I may have to change the name, so I don't want to network under that name yet.
She wouldn't let me build a website because through yahoo it was going to cost $40/mo, she said she could do it cheaper. Ok, that's fine, but getting her to do it has taken 2 months and yeppy, we have a front page that says "UNDER CONSTRUCTION". Everything is on her hard drive, so I don't have access to it. I just want her to understand where I'm coming from, but she won't; I just want out and to be on my own.
Any advise would be greatly appreciated.

Thanks

[Sagewing]

Show her this post.

When I read it it, it seemed that you were sincerely trying to protect your friendship. I respect that being your first concern, and the business second. She will too

[Lil_Red]

The first step is to sit down and talk to her. Explain to her that you don't feel it's going to work out after all. Tell her that you value her friendship more so you will be dissolving the business arrangement.

I'm going to guess that nothing was written on paper (no contract) so I would suggest that you go ahead with your plans to go it on your own.

Good luck!

[johntabita]

She is my best friend, so what I'm trying to figure out is how to get 100% of the business and keep my friendship.

What if you can't have it both ways? Which one are you willing to sacrifice, the business or the friendship? Just be clear on that before you talk to her.

[singleowner]

I'm going to guess that nothing was written on paper (no contract) so I would suggest that you go ahead with your plans to go it on your own.

Good luck![/QUOTE]



No there is no contract, just oral agreements. However, I came up with the name which I would like to keep; but she set up the email through her current email account and she set up paypal. So right now, things are kind of in her name and plus she was building the web site since she is better at that than me and it's on her hard drive. I think it's going to come down to me coming up with a new name and starting from scratch. That's not what I wanted, but it's easy enough to do I guess. It's better to do it now than to do it 6 months from now and there's alot of hard feelings. Plus, I'm not out networking this week because I'm not sure if there will be a name change or not and I don't want to be promoting for her. I just feel that for her, it's a hobby and wants extra spending money because she is not willing to risk anything, but she wants to reap the rewards of my risk.

Thank you for your responses, it's just hard to do this with the friendship involved.

[firehous]

What about something like this:

Make note of ALL the job responsibilities that need to be done. (Be as specific as possible. ie- accounting (going to the bank, sending invoices, collecting payment), cake designing (# of hours it takes, on average), networking 'Spend 5 hours per week at local events.')

Make 2 columns, one with your name, one with hers.

Under your name, write down all the things you've been doing.

Under hers, write down the ones SHE has been doing.

It'll be pretty plain to see who's doing more without being so 'in your face' confrontational. If she's willing to put the type of energy you expect, you can distribute the tasks equally or take more responsibility (and more equity) in the company.

You'll find out pretty quick how well you both work together.

Please keep us updated!

-Costas

[captainequity]

Aside from what has already been said, I would do one extra thing: put the onus on her to act.

Instead of telling her you want 100% of the business, tell her you know she is able to do 50% of the work. Put the burden on her to step up and take it, after a while she won't have anything to add, and then it will be a lot easier to sit down and discuss a change in equity split if it comes to that.

The truth is you need to be very careful about what you are doing.

I have had to `fire` a couple partners, and have had a friend do the same. In all cases I have lost touch with them, and the relationship was soured, so I wish you all the best. The reason I could `fire` an equal equity partner is because I added more value to the business, as it appears you do right now...and Im sure she knows that, but isn't motivated to do anything about it.

Like I say, don't force her out; explain her to her what she should be doing, tell her you know she can do her part and get her to agree to that much. Its a little manipulative, but it stops her from seeing you as `the guy who forced me out`. Make it clear what you expect, make sure she agrees you're being reasonable, and get her to commit to it.

Then if she continues on, she will blame herself not you.

Tough spot, though mate. She's the only one that can motivate herself, so at best its damage limitation if Im honest

Hope that helps

[DateinaDash]

This is why you should never go into business with a friend as a partner.

[Sagewing]

This is why you should never go into business with a friend as a partner.

It depends on the people. My partner is a good friend of mine and we are doing fine...

[singleowner]

UPDATE!

Ok, I just talked to her; it happened to be on the phone which is not what I wanted, but she starting talking about the business and that's where it started. I told her that I didn't feel that she was willing to give 50% to the business. Originally we talked about me getting laid off, combining my unemployment, the little bit of business money and her salary and splitting it 50-50 and I would be pounding the pavement for clients. Then, once things took off with the business, she would quit work on come on full time. Lay-off happens, but not doesn't want to follow through with said plan. She said that she can't afford the cut in pay, which I understand, but I want her to admit that if she isn't willing to give now, why should she be able to take 50% when things are good? She said it was my choice not to find another job, which is true; but how are you suppose to network with 9-5 people when you are one? Plus, this was the plan to get the business going. I have savings, she has no savings so she doesn't want to give up anything, so why should she reap the rewards when she hasn't put into this 50-50? I have made a list and she said she is going to do the same and we'll meet next Wed. to discuss everything. If we're going to stay in business together, which is not what I really want, we're coming to some kind of terms and I'm getting an attorney to draw up papers. Yes, it's my choice not to find another job, but I want to make a go of the business and it's not going to happen sitting on your a$$! And when I make it happen, what % is she entitled to? We've only been in the business for 2 months and I've solisited all of the business we've had. I go on all kinds of message board promoting, she doesn't do any of that. BTW, still no website up!

[captainequity]

How easy is it going to be for you to end the company and start another one?

It doesn't sound like she is being 100% co-operative or reasonable...I am not sure how you are going to be able to split the equity fairly with her.

Failing that, I would look at starting another company if possible (assuming your capital isnt too tied up, and other commitments); my friend has done that when he had problems with a partner, but he only had $x,xxx tied up, so it wasn't that hard a decision in one sense.

Still, I remember hearing that the marketing guy Saatchi left the marketing firm he founded when they were huge to start another one, and ended up taking a lot of the clients with him - because they wanted him not the company as such...if you have something similar going on with the people who are involved, I would bear that in mind

If you have all the contacts and motivation in practice the business is yours. getting things to reflect that on paper isnt as easy, esp if you already have a partnership agreement already done...if you don't the UK law is complicated on equity splits but basically if you verbally state that you have half each, i think it might be hard to rebut that via the circumstances...obviously your attorney will tell you whats what but thats what I remember from company law..

when you meet up with your friend, make sure she understands where you are coming from, and get her to propose a solution...be reasonable, because re: the above you are the one with the clout...

[firehous]

If we're going to stay in business together, which is not what I really want,

If you feel this strongly about not working with her, sticking together will be a sure recipe for disaster.

If a friend is considering marriage to a person they don't want to be with, would you tell them to go through with it?!

-Costas

[singleowner]

If you feel this strongly about not working with her, sticking together will be a sure recipe for disaster.

If a friend is considering marriage to a person they don't want to be with, would you tell them to go through with it?!

-Costas

I totally agree with this comment! One of our BIGGEST opportunities is the client who will be featured in Martha Stewart Wedding magazine. She told us a story of her going into business with a friend she had for 15 years, she was the one who did most everything and finally she had to tell the friend that it wasn't going to work out. In the beginning of her story, she said there is always one who has their nose to the grind and the other is more free sprited. My friend and I looked at each other because we know who is who. Said client has asked for all of our company information to post on her website as well as give to the magazine for publication. I've been holding off because I may end up having to change my name. I called the client last night because I wanted to let her know that the name may be changing since we are just starting the business, we'll give her all of the information in about a week. She flat out said, "remember the story I told you about me and my friend?" I said "yes"; she said "you know which one you are and it's apparent to other people as well". She said that she knew I was the one who did all of the samples for her and her suggestion was to split now. I told her that was probably what was going to happen and that's why there would be a possible name change. She said that she loved my work and knew that I would come through and that she would still stick with me; she even offered to help me with my website. It was hard for me to talk to a client about that; but this is Martha Stewart we're talking about and I want the right name in there. She won't let me do the work for free, so I am doing it at cost; but you can't put a price on the fact that my product will be in that magazine and the exposure I will have; that is priceless!
I do want to be on my own. Currently, there is no real money involved. We've been selling off of ebay, purchase the material with the payments and then split the profits 50-50. I have savings, but I'm not putting any of that into the business at this point. I am able to work from home. I will need some equipment, but I am fortunate that my father has some of the things I need at the moment to make me self sufficient and not have to take out loans or anything like that and I can still work from home, therefore, no real overhead.
I haven't networked at all this past week and won't until I know if I can keep the name or not because I don't want to be giving her clients. But, I still get up in the morning and work just like I had a regular job and still work into the night. My thinking is that you have to give 200% to get things going, after it's working, then you can settle down a bit.
I'll stop rambling! Thank you for everyones input, I have my husband and family telling me the same things, I just needed more reassurance that I would be doing the right thing. I guess if she's a true friend she will understand that I am the go getter and she is the let it come me person; and it's not 50-50.

Thanks!

[LittleFigment]

singleowner it looks like you spotted it early enough to save bothe th ebusiness and the friend. Best of luck with the business, it looks like it will go great for you.

[firehous]

Amen!

[singleowner]

I'm back in Martha Stewart! The bride had to fight hard for me with her planner, but I'm back in. I'm not telling my partner though. We were suppose to meet tonight to talk about everything, but she couldn't make it, so it got pushed to tomorrow. We'll see what happens!
I'm so excited about the magazine.

[xharine]

Hi, I agree with what firehous has said, if your gut feeling tells you it's not gonna work out, it's not gonna work out. I see from your last post that you've already made a decision, and I hope that you'll be firm and stick to it. Cause am a hopeless softhearted person who doesn't know how to be firm on such things, and I hope you wouldn't be like me. :P

I had to make a similar decision a couple of months back, and am really glad that I've made it in the end. Eventually I found out that friend wasn't worth my friendship after all, and I really saved myself a lot of trouble that could happen later on if I didn't back out just because of one word - friendship.

I guess this will be a test of your friendship, if she's really a true friend she'll understand you and your decisions. Sometimes in relationships, the length of time doesn't matter. It's easy for outsiders like me to say, because nobody will know how deep is the bond except for you and her.

Nevertheless I hope everything works out for you. Best of luck!