Your advice...
Discussion
Undirection said:
Thanks guys, really helpful comments.
Yes, the business is a job for now but as it expands I will have someone managing the day to day operations. We've had a graduate over the summer doing this and it worked well and so proved that this can work.
The business is too small really to make it worthwhile selling.
The long term benefits will be great and there's lots of exciting expansion possibilities and I am happy to be in it for the long game but just not without my business partner being as dedicated to it as I am. It's silly of him really because, of the 4 businesses he has, this is the one with the most potential by far, it's also growing the fastest and in 3 years will be the largest of them by some margin.
When this business is super successful in 3 years or so, how will you have got more than 30%?Yes, the business is a job for now but as it expands I will have someone managing the day to day operations. We've had a graduate over the summer doing this and it worked well and so proved that this can work.
The business is too small really to make it worthwhile selling.
The long term benefits will be great and there's lots of exciting expansion possibilities and I am happy to be in it for the long game but just not without my business partner being as dedicated to it as I am. It's silly of him really because, of the 4 businesses he has, this is the one with the most potential by far, it's also growing the fastest and in 3 years will be the largest of them by some margin.
I think it's the number 1 thing you need to consider seeing as you'll have done all the work.
I've been where you are and for me, the solution was to be 100% shareholder of my own enterprise. As it happens, we are doing much better than the business I left and it only took about 9 months of trading to get to a better position (I did take a 6 month holiday inbetween I'd add).
ModernAndy said:
When this business is super successful in 3 years or so, how will you have got more than 30%?
I think it's the number 1 thing you need to consider seeing as you'll have done all the work.
I've been where you are and for me, the solution was to be 100% shareholder of my own enterprise. As it happens, we are doing much better than the business I left and it only took about 9 months of trading to get to a better position (I did take a 6 month holiday inbetween I'd add).
Yes, exactly, great point. It'll be doing really well and it'll have been mostly down to me doing a low paid job in it for 3 years.I think it's the number 1 thing you need to consider seeing as you'll have done all the work.
I've been where you are and for me, the solution was to be 100% shareholder of my own enterprise. As it happens, we are doing much better than the business I left and it only took about 9 months of trading to get to a better position (I did take a 6 month holiday inbetween I'd add).
What exactly did you do?
Undirection said:
ModernAndy said:
When this business is super successful in 3 years or so, how will you have got more than 30%?
I think it's the number 1 thing you need to consider seeing as you'll have done all the work.
I've been where you are and for me, the solution was to be 100% shareholder of my own enterprise. As it happens, we are doing much better than the business I left and it only took about 9 months of trading to get to a better position (I did take a 6 month holiday inbetween I'd add).
Yes, exactly, great point. It'll be doing really well and it'll have been mostly down to me doing a low paid job in it for 3 years.I think it's the number 1 thing you need to consider seeing as you'll have done all the work.
I've been where you are and for me, the solution was to be 100% shareholder of my own enterprise. As it happens, we are doing much better than the business I left and it only took about 9 months of trading to get to a better position (I did take a 6 month holiday inbetween I'd add).
What exactly did you do?
2 years on and his business (which I left him 100% sharehholder of) is currently on its knees. So while I'm currently negotiating on a larger warehouse (which we need!!!), he's working out of a room in a friend's shop. That's why I'd advise you to cut any dead weight if you really want to turn your (well, maybe it's his really) business into something or alternatively I would start up doing the same thing without a schismatic business partner.
Had a bit of an impromptu chat about things today. Nothing decided but it began with him asking me if I'd sorted some element of our marketing out and I told him it was his job to do that. He said that I was being paid by the company I should do it. He's sort of right but its another thing I am doing. Of courser he said he did lots of other things (none of which take much time at all) and wasn't being paid either. We could employ someone but I am not confident about leaving things in their hands, albeit with some supervision. Our intern was good this summer but still cost us a few orders through her mistakes and having a junior person to drive the business is not the right thing to do. I guess until I am happy he is pulling his weight this will be an issue. More thinking still to do...
What's stopping you buying him out?
If the business is profitable and could be a success, it's surely 'just' a question of raising funds?
It seems to me from your comments on this thread that your business needs just one owner driving it (either you or your business partner) and another junior staff member, without a stake in the business, assisting in day to day work.
If the business is profitable and could be a success, it's surely 'just' a question of raising funds?
It seems to me from your comments on this thread that your business needs just one owner driving it (either you or your business partner) and another junior staff member, without a stake in the business, assisting in day to day work.
Undirection said:
Of courser he said he did lots of other things (none of which take much time at all) and wasn't being paid either.
I refer you back to my original post...
and re-ask the question you haven't answered - why are you in business with him? / What is stopping you from running your own business?
Does he have capital that you need / you don't have?
Does he have IPR that you need / you don't have?
there are lots of warning bells here, and if it is as you say then I can't see why you are carrying on as you are...
Undirection said:
Had a bit of an impromptu chat about things today. Nothing decided but it began with him asking me if I'd sorted some element of our marketing out and I told him it was his job to do that. He said that I was being paid by the company I should do it.
Sounds like he wants to minimise his workload, not balance it out or live up to what he agreed to do. If you are being paid well below the market rate you need to point this out and start pushing for change. Owning four businesses sounds great but if they are all underproducing this is probably not someone you want to need to be in business with.
I have a slightly different take on this.... your partner put up 70% of the cash and owns 70% of the business as a result. What he does and doesn't do in the business is immaterial really.
I run businesses with shareholders - in some instances they own the majority and I have a very small slice, simply because I didn't take the initial risk.
However, as the business grows, due to your hard work, you are not seeing any returns that compensate you.
I'd suggest writing a business plan showing where you're going to be in 36 months. If your partner likes the look of the numbers then you suggest that as you hit each of the financial targets that a new class of share is created that only you can subscribe to which will dilute him.
You'll need to take advice as there are tax issues (not big ones now, but potentially in the future). But if the business has a strong future, it's worth considering.
If the business is going to top out at £100k a year, then it's not worth doing.
Do you have a Shareholders Agreement?
I run businesses with shareholders - in some instances they own the majority and I have a very small slice, simply because I didn't take the initial risk.
However, as the business grows, due to your hard work, you are not seeing any returns that compensate you.
I'd suggest writing a business plan showing where you're going to be in 36 months. If your partner likes the look of the numbers then you suggest that as you hit each of the financial targets that a new class of share is created that only you can subscribe to which will dilute him.
You'll need to take advice as there are tax issues (not big ones now, but potentially in the future). But if the business has a strong future, it's worth considering.
If the business is going to top out at £100k a year, then it's not worth doing.
Do you have a Shareholders Agreement?
Undirection said:
My wife says that he has got it easy,
This might make me unpopular but this is the bit which jumps out at me.If YOU aren't happy then renegotiate either your split or your wages. If you can't agree between you and your business partner then leave. Just make sure you understand exactly what the other guy is doing before you leave though as otherwise your new venture might end up with a gaping hole. The hole might not take much physical time to fill but require a specific skill set.
Dont listen to your wife as she is not in possession of all the facts of how the business runs.
Sorry if the above sounds harsh.
Thanks all, been away for a few days. I guess my frustration is that with this other interests I don't feel he is committed to it as I am.
I do see it from both sides. For him he started something up which I have a part of now and we both have specific roles within the business however mine are almost full time operational meaning I have little time to do other things whereas it is effectively a sideline for him. From my side I am driving this, mostly for his benefit and could be on low wages for 3 years albeit with a 30% chunk of hte business but who is to say if that will be compensatory enough?
We could employ someone on the day to day operational side but IMO this person still needs close monitoring and we should both be much more hands on in these early years, not giving a lot of stuff to a junior.
I do see it from both sides. For him he started something up which I have a part of now and we both have specific roles within the business however mine are almost full time operational meaning I have little time to do other things whereas it is effectively a sideline for him. From my side I am driving this, mostly for his benefit and could be on low wages for 3 years albeit with a 30% chunk of hte business but who is to say if that will be compensatory enough?
We could employ someone on the day to day operational side but IMO this person still needs close monitoring and we should both be much more hands on in these early years, not giving a lot of stuff to a junior.
I have a few questions.
what does the business do? In a nutshell.
Does it operate from premises? Which name are these in an individual or Ltd company?
Is it a simple partnership or Ltd company.
With a turnover of 65k it must run at very high margins to pay any salary, what is the EBITDA on that 65k.
I ask these questions as it sounds like you have bought yourself a job and with the level of turnover you have paying a good salary, which i'd define as 50k plus is a fair way off.
Are you able to answer the above as without it's all a bit shot in the dark.
what does the business do? In a nutshell.
Does it operate from premises? Which name are these in an individual or Ltd company?
Is it a simple partnership or Ltd company.
With a turnover of 65k it must run at very high margins to pay any salary, what is the EBITDA on that 65k.
I ask these questions as it sounds like you have bought yourself a job and with the level of turnover you have paying a good salary, which i'd define as 50k plus is a fair way off.
Are you able to answer the above as without it's all a bit shot in the dark.
Thankyou4calling said:
I have a few questions.
what does the business do? In a nutshell.
Does it operate from premises? Which name are these in an individual or Ltd company?
Is it a simple partnership or Ltd company.
With a turnover of 65k it must run at very high margins to pay any salary, what is the EBITDA on that 65k.
I ask these questions as it sounds like you have bought yourself a job and with the level of turnover you have paying a good salary, which i'd define as 50k plus is a fair way off.
Are you able to answer the above as without it's all a bit shot in the dark.
Without saying too much, light outdoor constructionwhat does the business do? In a nutshell.
Does it operate from premises? Which name are these in an individual or Ltd company?
Is it a simple partnership or Ltd company.
With a turnover of 65k it must run at very high margins to pay any salary, what is the EBITDA on that 65k.
I ask these questions as it sounds like you have bought yourself a job and with the level of turnover you have paying a good salary, which i'd define as 50k plus is a fair way off.
Are you able to answer the above as without it's all a bit shot in the dark.
We have a main office but our material comes from a supplier and we use contractors for building
Limited Co
Yes it does
Yes, I guess so
My business partner is aiming to build 4 businesses, one has prob £100k investment (I suspect) and is still barely off the ground but is getting a junior employe to build it/drive it, one is a stable small co with high margins which has an employee but is struggling for growth and has low workload due to it relying on referrals in the past which have dried up, one is a new bit of software that is new and unproven and struggling to launch.
EDIT Just been thinking about this last part. He is employing people to drive his new businesses and this is fine but I am not a junior employee. I do have 30% of the business but i bought that so, excluding that, I am working as a junior employee but doing a much better job. Hmmm.. I don't think he could cope with the business employing a junior person and having to manage them (as I don't need managing).
Edited by Undirection on Thursday 10th September 17:28
Thanks for your reply.
Why are you so vague about what you do? I can't understand that.
And your EBITDA, thats important if you are looking to buy your partner out.
You have options;
1. Carry on as you are moaning and not being happy but not doing much about it. This is what most people do.
2. Discuss the situation with your partner. Write an agenda of points and put forward solutions which are feasible. Put dates on these and agree a follow up.
It sounds like if you dont do something it will drift and either come to a head and be acrimonius or the business will fizzle out.
Why are you so vague about what you do? I can't understand that.
And your EBITDA, thats important if you are looking to buy your partner out.
You have options;
1. Carry on as you are moaning and not being happy but not doing much about it. This is what most people do.
2. Discuss the situation with your partner. Write an agenda of points and put forward solutions which are feasible. Put dates on these and agree a follow up.
It sounds like if you dont do something it will drift and either come to a head and be acrimonius or the business will fizzle out.
More thoughts and atm it seems I have 2 options:
1. Bail
2. Stay
If I stay, although the business is exciting and has lots of potential that we have discussed, I am going to be tied to little or no income for 2-3 years yet. No guarantees of success of course but I am optimistic based on last 2 years. So shortish term pain/long term potential gain.
If I leave i go back to FT employment with all its pros (regular good salary, benefits etc.) but doing what I have always done. Short term gain, long term status quo
1. Bail
2. Stay
If I stay, although the business is exciting and has lots of potential that we have discussed, I am going to be tied to little or no income for 2-3 years yet. No guarantees of success of course but I am optimistic based on last 2 years. So shortish term pain/long term potential gain.
If I leave i go back to FT employment with all its pros (regular good salary, benefits etc.) but doing what I have always done. Short term gain, long term status quo
Have you got a shareholders agreement.
You realise, if you stop working you still own 30% of the business.
Are you a Director?
Whatever happens you own 30.
Disolve this business and start a new one 50/50 or go on your own.
You have to realise, for the future, that when you sign up to a contract then that's it, if it goes bad or good you took the decision at the start.
As slightly daftly shown on Dragons Den where the Dragons always try and stuff the business owners for exactly this scenario.
Negotiate a better contract next time.
You realise, if you stop working you still own 30% of the business.
Are you a Director?
Whatever happens you own 30.
Disolve this business and start a new one 50/50 or go on your own.
You have to realise, for the future, that when you sign up to a contract then that's it, if it goes bad or good you took the decision at the start.
As slightly daftly shown on Dragons Den where the Dragons always try and stuff the business owners for exactly this scenario.
Negotiate a better contract next time.
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