Comments on: How to ditch bad business partners http://smallbusiness.blogs.cnnmoney.cnn.com/2009/02/26/how-to-ditch-bad-business-partners/ Editors from FSB magazine answer your pressing small-business questions. Tue, 15 Dec 2009 12:52:55 +0000 http://wordpress.com/ hourly 1 By: s.kumar,vijayawada,a.p http://smallbusiness.blogs.cnnmoney.cnn.com/2009/02/26/how-to-ditch-bad-business-partners/#comment-2059 s.kumar,vijayawada,a.p Fri, 13 Nov 2009 10:56:24 +0000 http://askfsb.blogs.fsb.cnn.com/?p=930#comment-2059 this is santosh kuamr from hyderabad, i have started the business with one person with 50-50% profit and loss the thing is here that as i have good command on how to develop business the thing is that i dont have good communication skills,And my partner had bought somemore members in the company so i want to ditch them just help me in this issue.they are looking me as a office boy thats the reason y i want to ditch them.plz send me solution as son as possible i have invested around 25000 in this business and all who are working in this company are looking as a cheap personality to me. this is santosh kuamr from hyderabad,
i have started the business with one person with 50-50% profit and loss the thing is here that as i have good command on how to develop business the thing is that i dont have good communication skills,And my partner had bought somemore members in the company so i want to ditch them just help me in this issue.they are looking me as a office boy thats the reason y i want to ditch them.plz send me solution as son as possible i have invested around 25000 in this business and all who are working in this company are looking as a cheap personality to me.

]]> By: SammyP , http://smallbusiness.blogs.cnnmoney.cnn.com/2009/02/26/how-to-ditch-bad-business-partners/#comment-1840 SammyP , Tue, 16 Jun 2009 18:15:21 +0000 http://askfsb.blogs.fsb.cnn.com/?p=930#comment-1840 The only real way to keep the business to yourself is to WALK OUT and start the business new. If intellectual property or trademark laws are holding you back there is essentially nothing that you can do without a nasty legal battle. The only real way to keep the business to yourself is to WALK OUT and start the business new. If intellectual property or trademark laws are holding you back there is essentially nothing that you can do without a nasty legal battle.

]]> By: Sammy, Chicago, IL http://smallbusiness.blogs.cnnmoney.cnn.com/2009/02/26/how-to-ditch-bad-business-partners/#comment-1583 Sammy, Chicago, IL Wed, 04 Mar 2009 05:47:51 +0000 http://askfsb.blogs.fsb.cnn.com/?p=930#comment-1583 Amy, Are you the one who thought of this business idea and are the one making it work? If so, and you have no shareholders agreement, no non-compete agreement, then ask to be bought out. As a minority shareholder you are basically SOL. If they will not buy you out, walk away. Start your own business and compete. Find a financial backing that does not require an equity partner, a banker, a friend, an investor who is not interested in an operational role. Stay away from key man insurance on each other unless you REALLY KNOW YOUR PARTNER. It literally could mean a death sentence. Watch the Sapranos and you will understand, it happens in real life. You may want insurance on your life and your family as beneficiary, thats OK. So many shareholders are either trapped or are released by their shareholder agreements. It is key you understand what you are signing. It is well worth getting a lawyer to explain it to you. I met a small business owner who had put all of his money into his business, and he was facing personal bankruptcy. There was a clause in his shareholder agreement, that as soon as he filed personal bankruptcy, his partners could buy him out for just a nominal sum. That's what they were waiting for. Not everyone is shark, but you better prepare as if they are. I have seen final agreements, contracts gone through by lawyers for each side, and at the supposed final signing, both sides had slipped in items not agreed to, hoping to catch the other side out. I can be that bad. Amy,
Are you the one who thought of this business idea and are the one making it work? If so, and you have no shareholders agreement, no non-compete agreement, then ask to be bought out.
As a minority shareholder you are basically SOL. If they will not buy you out, walk away. Start your own business and compete. Find a financial backing that does not require an equity partner, a banker, a friend, an investor who is not interested in an operational role.

Stay away from key man insurance on each other unless you REALLY KNOW YOUR PARTNER. It literally could mean a death sentence. Watch the Sapranos and you will understand, it happens in real life. You may want insurance on your life and your family as beneficiary, thats OK.

So many shareholders are either trapped or are released by their shareholder agreements. It is key you understand what you are signing. It is well worth getting a lawyer to explain it to you.

I met a small business owner who had put all of his money into his business, and he was facing personal bankruptcy. There was a clause in his shareholder agreement, that as soon as he filed personal bankruptcy, his partners could buy him out for just a nominal sum. That's what they were waiting for.

Not everyone is shark, but you better prepare as if they are. I have seen final agreements, contracts gone through by lawyers for each side, and at the supposed final signing, both sides had slipped in items not agreed to, hoping to catch the other side out.
I can be that bad.

]]> By: David Phoenix, Az http://smallbusiness.blogs.cnnmoney.cnn.com/2009/02/26/how-to-ditch-bad-business-partners/#comment-1580 David Phoenix, Az Mon, 02 Mar 2009 22:08:43 +0000 http://askfsb.blogs.fsb.cnn.com/?p=930#comment-1580 Do you have a non compete or any intellectual property? Because if you don't maybe you should just sell out to them and then compete against them. Or you could ally with the control freak and start billing the company for time you put in going forward. Then the lazy partner will be forced to make a capital contribution and if he/she doesn't then you can dilute that person. Most businesses are not worth fighting over. I mean, what kind of business is it? Do you have a non compete or any intellectual property? Because if you don't maybe you should just sell out to them and then compete against them. Or you could ally with the control freak and start billing the company for time you put in going forward. Then the lazy partner will be forced to make a capital contribution and if he/she doesn't then you can dilute that person. Most businesses are not worth fighting over. I mean, what kind of business is it?

]]> By: Krish, S. Plainfield NJ http://smallbusiness.blogs.cnnmoney.cnn.com/2009/02/26/how-to-ditch-bad-business-partners/#comment-1579 Krish, S. Plainfield NJ Mon, 02 Mar 2009 13:54:00 +0000 http://askfsb.blogs.fsb.cnn.com/?p=930#comment-1579 I do not have answer to Amy's problem but my story has a lot in common with her. I started a company in 2004 with a friend of mine. Unlike Amy, we thought of many contingencies. Before we started, we wrote each other's strengths and weaknesses and compared notes. I can honestly say that my opinion about him is the same what it was in 2004. He was the wrong guy to be a business partner, and I dropped my objectivity because my friendship with him. I still have copies of those papers. I look at those papers these days and ask myself, what was I thinking? We had a contract in place. We purchased life insurances on each other etc. Our contingency plan was solid and was designed only for two years. The idea was if the business lasted two years, there is very good chance that it will survive a lot longer. We were wrong. By the end of the third year, my relationship with my partner deteriorated to all time low. We blamed each other for business being bad and lack of direction. We blamed each other for incurring unnecessary expenses. Every little thing became an argument. It was obvious that both of us wanted out. However, our business being in the service industry, it was very hard for anyone to assess the true value of the company. Buying each other out was out of the question because both of us did not have much money. Luckily, a buyer offered us a fair price. Since both of us wanted out so bad, we gladly agreed. Even this closure did not proceed without a hitch. During the transition period, some variables came up. Buyer used this as an excuse to not pay us the last installment of the sale price. Buyer, acutely aware of our (my partner and I) differences, took complete advantage the situation. If I was to turn the clock back, my actions would have been quite different. In these four plus years of partnership I learnt some valuable lessons. 1. Do not go in business with friends unless you are 99.99% sure that it will work. Even if you are very sure, get a second opinion from people who know you both. 2. A lawyer told me once, don't take partners, if you don't have to. Many will disagree with him. But I see it very clearly now. 3. If you decide to take partner(s), retain control of the business by owning a greater percentage. A bad 50-50 partnership will lead to stalemate. 4. Of course, have a contract drawn etc. However, no amount of contingency or contracts will be of help, when things go south. 5. When the things are bad, you will experience tremendous amount of stress. Learn to deal with it. You will age at an accelerated rate during the stressful times. I kept us with my exercise and tried my best to avoid stress at all cost. These days, you can give me the worst news there is, and I will not even blink. I do not have answer to Amy's problem but my story has a lot in common with her. I started a company in 2004 with a friend of mine. Unlike Amy, we thought of many contingencies. Before we started, we wrote each other's strengths and weaknesses and compared notes. I can honestly say that my opinion about him is the same what it was in 2004. He was the wrong guy to be a business partner, and I dropped my objectivity because my friendship with him. I still have copies of those papers. I look at those papers these days and ask myself, what was I thinking? We had a contract in place. We purchased life insurances on each other etc. Our contingency plan was solid and was designed only for two years. The idea was if the business lasted two years, there is very good chance that it will survive a lot longer. We were wrong. By the end of the third year, my relationship with my partner deteriorated to all time low. We blamed each other for business being bad and lack of direction. We blamed each other for incurring unnecessary expenses. Every little thing became an argument. It was obvious that both of us wanted out. However, our business being in the service industry, it was very hard for anyone to assess the true value of the company. Buying each other out was out of the question because both of us did not have much money. Luckily, a buyer offered us a fair price. Since both of us wanted out so bad, we gladly agreed. Even this closure did not proceed without a hitch. During the transition period, some variables came up. Buyer used this as an excuse to not pay us the last installment of the sale price. Buyer, acutely aware of our (my partner and I) differences, took complete advantage the situation.

If I was to turn the clock back, my actions would have been quite different.

In these four plus years of partnership I learnt some valuable lessons.

1. Do not go in business with friends unless you are 99.99% sure that it will work. Even if you are very sure, get a second opinion from people who know you both.

2. A lawyer told me once, don't take partners, if you don't have to. Many will disagree with him. But I see it very clearly now.

3. If you decide to take partner(s), retain control of the business by owning a greater percentage. A bad 50-50 partnership will lead to stalemate.

4. Of course, have a contract drawn etc. However, no amount of contingency or contracts will be of help, when things go south.

5. When the things are bad, you will experience tremendous amount of stress. Learn to deal with it. You will age at an accelerated rate during the stressful times. I kept us with my exercise and tried my best to avoid stress at all cost. These days, you can give me the worst news there is, and I will not even blink.

]]> By: kent fargo, nd http://smallbusiness.blogs.cnnmoney.cnn.com/2009/02/26/how-to-ditch-bad-business-partners/#comment-1578 kent fargo, nd Sun, 01 Mar 2009 23:18:59 +0000 http://askfsb.blogs.fsb.cnn.com/?p=930#comment-1578 If you don't have a legal document and you haven't signed anything, do you have a legal obligation to anything? Pick up your marbles and play elsewhere. You may lose a friendship, but its business. If you don't have a legal document and you haven't signed anything, do you have a legal obligation to anything? Pick up your marbles and play elsewhere. You may lose a friendship, but its business.

]]> By: Noble Ackerson, Alexandria, Virginia http://smallbusiness.blogs.cnnmoney.cnn.com/2009/02/26/how-to-ditch-bad-business-partners/#comment-1577 Noble Ackerson, Alexandria, Virginia Sun, 01 Mar 2009 16:47:07 +0000 http://askfsb.blogs.fsb.cnn.com/?p=930#comment-1577 One partner has 34%, the other 33%. In a partnership I believe both partners 67% trumps your 33% stake in ownership. Try pulling one partner on your side to agree with the breakup. One partner has 34%, the other 33%. In a partnership I believe both partners 67% trumps your 33% stake in ownership. Try pulling one partner on your side to agree with the breakup.

]]> By: Cherie' Seattle, WA. http://smallbusiness.blogs.cnnmoney.cnn.com/2009/02/26/how-to-ditch-bad-business-partners/#comment-1576 Cherie' Seattle, WA. Sun, 01 Mar 2009 16:24:48 +0000 http://askfsb.blogs.fsb.cnn.com/?p=930#comment-1576 Get out now. Have a neutral party be the "interventionist" Write down all of your questions & concerns. You can also speak to an attorney free of charge in your state in partnership business law (check your Better Business Bureau or Small Business Administration) I had a business partner that had filed bankruptcy (which I didn't know) in the past. She had the books. What a mess. I took over the books & straightened them out. Best to do a background check & credit report on potential business partners! CAR Seattle Get out now. Have a neutral party be the "interventionist" Write down all of your questions & concerns. You can also speak to an attorney free of charge in your state in partnership business law (check your Better Business Bureau or Small Business Administration) I had a business partner that had filed bankruptcy (which I didn't know) in the past. She had the books. What a mess. I took over the books & straightened them out. Best to do a background check & credit report on potential business partners! CAR Seattle

]]> By: Magnum Steele, San Diego, CA http://smallbusiness.blogs.cnnmoney.cnn.com/2009/02/26/how-to-ditch-bad-business-partners/#comment-1568 Magnum Steele, San Diego, CA Fri, 27 Feb 2009 20:42:22 +0000 http://askfsb.blogs.fsb.cnn.com/?p=930#comment-1568 Partnerships are the worst type of business entity. It's hard enough to succeed in business without the drama of partnerships. You should have made yourself the managing partner in the llc and the others just passive partners with no say. Partnerships are the worst type of business entity. It's hard enough to succeed in business without the drama of partnerships. You should have made yourself the managing partner in the llc and the others just passive partners with no say.

]]> By: Don, Franklin, TN http://smallbusiness.blogs.cnnmoney.cnn.com/2009/02/26/how-to-ditch-bad-business-partners/#comment-1567 Don, Franklin, TN Fri, 27 Feb 2009 18:13:28 +0000 http://askfsb.blogs.fsb.cnn.com/?p=930#comment-1567 Have them buy you out of your ownership. It looks like there is no non-compete, so leave and start your own business. If the response is fantastic as you say it is, and you're the one generating all of the business, the clients will follow you. You're all set!!! Have them buy you out of your ownership. It looks like there is no non-compete, so leave and start your own business. If the response is fantastic as you say it is, and you're the one generating all of the business, the clients will follow you. You're all set!!!

]]> By: W. G. Wells http://smallbusiness.blogs.cnnmoney.cnn.com/2009/02/26/how-to-ditch-bad-business-partners/#comment-1566 W. G. Wells Fri, 27 Feb 2009 17:58:21 +0000 http://askfsb.blogs.fsb.cnn.com/?p=930#comment-1566 bill@wgw I have just experienced the same problem but with children of my partner of 30 years without any disagreements and a solid written partnership agrement that ended up in cout. Do not put any confidence in lawyers or courts. Get out now and insist on a written release if you pay anything buuut get out and operate the business in your own name. But get out NOW. You neglect to mention that as a partner you are personally liable for business debts and contracts they create. bill@wgw I have just experienced the same problem but with children of my partner of 30 years without any disagreements and a solid written partnership agrement that ended up in cout. Do not put any confidence in lawyers or courts. Get out now and insist on a written release if you pay anything buuut get out and operate the business in your own name. But get out NOW. You neglect to mention that as a partner you are personally liable for business debts and contracts they create.

]]> By: Jon, Marietta, GA http://smallbusiness.blogs.cnnmoney.cnn.com/2009/02/26/how-to-ditch-bad-business-partners/#comment-1565 Jon, Marietta, GA Fri, 27 Feb 2009 16:23:23 +0000 http://askfsb.blogs.fsb.cnn.com/?p=930#comment-1565 My business partner had the idea that being a business owner meant only working when you wanted to (which was rarely), partying all the time, and sleeping in late. Remember - no one works as hard as you do, or has the passion you have. My business partner had the idea that being a business owner meant only working when you wanted to (which was rarely), partying all the time, and sleeping in late. Remember – no one works as hard as you do, or has the passion you have.

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