Business Advice

[BigSi]

Long story, so here is the shorten version. My business partner and myself both live in different towns. He has the business address and main phone number, so because of this most of our work comes from his area. He therefore does pretty much of the quoting, invoicing, emergency call outs (has the works van), site visits, and knows pretty much most the people. Because were equal partners, he feels that he is doing most the work and should take more of a reward. He therefore wants me to become employed and work for him, there by loosing my say in the business (including a business name change). He also wants to invest more money into the business, that I can’t match.

Just after some advice, on the best cause of action.  :-k  :-k  :-k  :-k

[Lord Shagg-Pyle]

I think a chat with a solicitor may be in order. Sounds like he is trying to shoulder you out.

[V8MoneyPit]

If there is a genuine difference in hours worked, it is only fair to split the profit by the same proportion. We do exactly that in our business, but as a Ltd company we do it by means of dividends.

However, you have the difficulty of him receiving the majority of the calls. Is there any way you can take on more of the quoting, etc to even out the work load? Or is he actively persuing most of the work to leave you out of it?

I guess it ultimately comes down to your relationship. Can you talk it through with him to sort something out that evens out the load? If not, it has to be said, your business partnership is not likely to last anyway. Sorry to be so brutal. I do mean it in the most constructive way. If the partnership looks like it has no future, you are best recognising it sooner rather than later.

Do you have a formal partnership agreement drawn up? If so, you both have to live with it unless agreed otherwise.

One partner investing extra money is the easy part. Treat it as a loan. You both have to agree an interest rate based on what your bank would charge for the equivalent loan and he has the right to draw that interest before any other money is drawn from the business. You should also agree a reasonable term for the loan and from that, you can work out the monthly repayments, also drawn before any other drawings.

You still remain equal partners in terms of working capital and business value.

[BigSi]

Most of the quoting is for work at his end (knows more people, builder, plumbers etc, and being ex-navy), and a majority of it is after hours (when people are home). I would like to do more of the quoting, but it doesn’t look very business like turning up in a V8 Land Rover! I would like to even the load, but as he has the office at his home, I don’t really have any access to it (we don’t want to spit the office either).

We have no formal partnership agreement drawn up, and if it was to disband (not what I want), we would both loose money (loans etc).

I don’t think it’s a case of shouldering me out, because he has the business talent, and I have the technical talent.

I enjoy working with the guy and we do get along well, and I understand where he is coming from, if the situation was reversed I would feel the same. But stuck for ideas on how to proceed, and just wanted to know how other people do it.

[wheeler]

both take a wage that way you get paid for every hour worked
any profet can be invested back to the business
which is what he wants
which is better for both of you
as for the office at his house he can charge the business a monthly rate for this

[TechnoTurkey]

I'd be doing my damn hardest to generate more work in my local area.

Nothing wrong with turning up in the land rover if you ask me - maybe get some polo necks printed if you are worried about looking professional.

Advertise in your local area a bit more etc etc, plenty you can do to redress the balance.

I would not personally go for teh option of becoming an employee as you effectively loose all the benefits of being self employed and there is nothing to stop him sacking you in the future.

[TechnoTurkey]

You could even make the company go 'Ltd' and be 50/50 shareholders - therefore your ownership of the company is never in doubt but you could then each pay each other an hourly wage based upon work done then a dividend on your shares on top of that out of any other profts.

[littlepow]

My business partner and myself both live in different towns. He has the business address and main phone number, so because of this most of our work comes from his area. He therefore does pretty much of the quoting, invoicing, emergency call outs (has the works van), site visits, and knows pretty much most the people.

Can't you set up an on call rota, where by both parties take it in turn to have the works van and cover all emergency call outs for both towns for a week. This may require a out of hours mobile, which could also be used to help clients with 24hr access to your companies services.

This would help with balancing out of hours work, could also help you network with compainies (companies usually have contact with others in a similar trade area). Creating more contacts and business in your area.

[BigSi]

I'd be doing my damn hardest to generate more work in my local area.

Although we have adverts and given out plenty of business cards, most of the work has been from the people that he knows.

Like I said before, because the business is based in his area (30 miles away), most of the work is in that area too. He keeps the work van for emergency calls and quoting of jobs, and picks me up every day from a point mid way (leaving the Landy in a shopping car park). The main issue is that the office is at his home, he brings most of the work in, and he wants to invest more money that I can’t match (mentioned the loan and interest bit, and paid more money for the extra work, but those ideas were dismissed).

Basically he is saying that either I go employed with him, or he buys out my side of the company and keeps the van (company owned but in his name), tools, equipment etc, and he carries on himself, while I look for another job.

Kind of stuck between a rock and a hard place.

[V8MoneyPit]

That sounds like he wants the business to himself. Frankly, if he won't entertain a profit split based on hours worked, it sounds like he want's to go it alone and is just making it impossible for you to stay as part of the business.

I cannot think of any reasonable justification for not splitting based on hours. What were his reasons for rejecting it? He can only gain by doing this. He has more of the profit from hours worked and he gets interest on the loan.

Could you take his buyout and set up yourself? It's not like you will be taking his business away if most of it is local to him anyway.

[gnasha]

sounds like he has relised its going to make money and wants it all for himself and usual story not what u no but who u no and if he wants to buy u out half of what it is all worth now is is what u should be getting

[Wireless]

So if you're the technical expert, how will he manage that side of the business on his own?  Sounds like you have more to offer than he cares to admit.

He's got no justification in wanting to get rid of you, since a division of profits based on hours worked, plus interest on his loan to the business, plus charging the business for supplying an office, would be the fairest solution.

Obviously, he feels the business is going to take off in a big way, and wants it all for himself, so you have to take a step back and decide if you really want to work with someone trying to screw you out of the future.

It's a shame you have no written agreement, which weakens your case, but if it were me, I'd take the money from his buy out, and then offer to go self-employed as a technical consultant to his business, while sorting something else out.

Consultancy is big money, much better than being an employee, since you're still your own boss, will be able to manage your own time, and can quote for work outside of the business.

You might even find that your technical consultancy will over time base more of it's work outside of his business than inside, which makes you independent, and less likely to be affected by his business failing.

You certainly cannot carry on as things are, bite the bullet.

[BigSi]

Thanks for all your replies.

We have come to an agreement that like V8moneypit mentioned, where we split the profits to reflect the amount of work done. He will obviously get a bigger percentage for the extra work done, and I still remain a partner. An agreement which sorts out all our problems and are both are happy with.

Like all new businesses, there are always hick-cups!  :D  :D  :D  :D

[V8MoneyPit]

Glad you found common ground. And happy I could be of help.  :D

You should really get a formal partnership agreement written up. It may be a requirement if you ever need a bank loan or apply for a grant.

May I ask what sort of business you are in?

[BigSi]

It’s a small electrical contracting business. We both worked for the same employer, and later decided that we could offer a better service ourselves, so the company was born.

Its great not having a boss, when the weathers nice….go to the beach!!!!  :D  :D  :D  :D

[V8MoneyPit]

Its great not having a boss, when the weathers nice….go to the beach!!!!  :D  :D  :D  :D

 :lol:  :lol:
Not sure that is quite the best business ethos! We thought it would be a breeze 15 years ago........ Worked 7 days a week for the first 5 years or so and still only just earned a 'living'. It was probably more like 8 years before the income was what I'd call comfortable. Went limited a couple of years ago because it was more tax efficient by then.

But you're right about not having to answer to a boss. I would find it so difficult to go back to a conventional job.

[Thrasher]

But you're right about not having to answer to a boss. I would find it so difficult to go back to a conventional job.

Been 16 years since I had a boss ..... would be very difficult to work for one I agree!

[Range Rover Blues]

Whereas I'm sick of being self employed.  TBH if you become an employee, he will have to pay more tax, insure you, get an accountant to do the wages and in all likleyhood make you redundant if he wants to get rid of you.  I just don't see how that works for him, he'd have to pay you a salary even if there was no work :?

[BigSi]

That was my point too!!!!!!

[richo]

Jeep 94 walk away and start up on your own .
I do most of the running around in my business but could not earn with out my partner and i know this.
If he's moaning about do more work than you he will be worse if you worked for him and would probally look down on you .
Be brave and go it alone.Just remember those who want to work will aways find work.