Business partner issues

bistro

Need some advice here.

I went into business a year ago with a guy I meet and worked with through previous working relationships. I had spotted an emerging market requiring what we had to offer. We formed a limited company, 50% shareholdings each. Initial investment was minimal – 3k each. The business sector is print/ web design related.
The skills I brought to the table were sales, business start-up and management. I had started 2 previous companies, both of which I still own/manage. My business partner brought the web design / graphics skills to the company.

Over the past year, we have remained quite a small company; however, have had a constant stream of projects, whilst building up a firm customer base. My other 2 companies are big customers of the company under discussion (all straight down the line, company law and good business practice wise). In this time we have being experimenting with a lot of new techniques and working/researching new products to sell.


Since we have being in business, we have reinvested 90% of profits back into the company whilst taking very nominal sums in wages – approx. avg. €200 each per week.

Now the issue:
I have noticed in the past 3 months my business partner has become increasingly lazy, with work generally commencing each day after 10am and “having to be home for dinner before 6pm”. Deadlines for projects are being neglected, with Mondays turning into the following Friday.
We have also started to argue over the pricing of certain jobs, with him believing his skills are worth 3-5 times more than what im quoting customers. (he will contact a large graphic design “arthouse” place, get a quote for a large ecommerce project and then throw it at me, believing our small company can command such ridiculous prices without the company infrastructure and support in place – I currently do all customer sales, liaising and handle all project management – I wont touch or offer large projects +€10k because I know we cant handle them yet)

I don’t undersell our products and services either, I merely charge what the max. our market can afford to pay. We are still learning and I wont sell what I’m not capable of following up with 100% customer support.

We discussed earlier last week this growing ‘lack of wanting to work’, with my business partner stating there is so much more to life than working more than 35 hours a week. I’m no slave merchant but I strongly believe that if you want to make a business successful, you must work very bloody hard to get it of the ground until such time you can scale things back (hours work wise) and manage your employees to carry on the day to day functions.

Although there is not a major problem yet within our working relationship or company, I can easily foresee some big blow ups in the near future. This business partners skills are key in the business, however, not irreplaceable (at quite a cost though!)
As my previous working relationships with business partners have all being fine, im really stumped as to what to start planning for here.

I have worked very hard building this company name and have busted my nuts working 70 hours + every week to get things working.

I need advice on all levels here – both morally and immorally, however not illegal!
Plan A for the minute is to smooth things over, but I need a plan B, C and D!

Thanks for reading and any advice greatly appreciated.

antoinolachtnai

I don't suppose you have a shareholder's agreement?

You are going to have to bite the bullet on this.

What about taking in a new partner and replacing him? Or else paying someone to do the work?

This would require extra capital or issue of new shares. Is your partner willing to put in the extra capital? Are you? This will determine the future ownership of the company.

Do this as quickly as you can.

I am a bit concerned that maybe your partner doesn't have enough money to live on, and that this is sapping his morale.

Also, putting myself in your partner's shoes for a bit more, I might feel that the price being paid to this company for the work done for the 'half-sister' companies is below the market price considering the quality and work involved, and this seems like it might be a legitimate concern.

I would have this out fully pretty soon if I were you.

antoin.

professore

Hi, been in business myself for 10 years, playing devil's advocate below ...

Since we have being in business, we have reinvested 90% of profits back into the company whilst taking very nominal sums in wages – approx. avg. €200 each per week.

Does he have any other source of income? To be honest if I was your partner I would have quit long ago ... why are you taking on obviously unviable customers? What are you buying with your "reinvestments" ? Surely you don't need huge amounts of equipment?

Now the issue:
I have noticed in the past 3 months my business partner has become increasingly lazy, with work generally commencing each day after 10am and “having to be home for dinner before 6pm”. Deadlines for projects are being neglected, with Mondays turning into the following Friday.
We have also started to argue over the pricing of certain jobs, with him believing his skills are worth 3-5 times more than what im quoting customers. (he will contact a large graphic design “arthouse” place, get a quote for a large ecommerce project and then throw it at me, believing our small company can command such ridiculous prices without the company infrastructure and support in place – I currently do all customer sales, liaising and handle all project management – I wont touch or offer large projects +€10k because I know we cant handle them yet)

So he's basically just the dogsbody churning out the graphic design ... why are you "project managing" ? Is he incapable of doing it? Why don't you just concentrate on the customer facing side and let him manage the project?

I don’t undersell our products and services either, I merely charge what the max. our market can afford to pay. We are still learning and I wont sell what I’m not capable of following up with 100% customer support.

Are you sure you're not underselling? Or maybe going after the wrong clients? How are you going to switch to more lucrative clients in the future and dump the "cheaper" clients you are now busting your ass to win? That will seriously damage your reputation. In your (and my) sort of business if you're not making money to pay you a living wage from day one your business is unsustainable.

Although there is not a major problem yet within our working relationship or company, I can easily foresee some big blow ups in the near future. This business partners skills are key in the business, however, not irreplaceable (at quite a cost though!)
As my previous working relationships with business partners have all being fine, im really stumped as to what to start planning for here.

It also seems like you have made up your mind on this guy, but yet it also sounds like you have not discussed it with him. Maybe a quiet chat where you can both air your grievances might clear the air, or at least make the split easier.

Trump

Your partner is a vital part of the business as he is the web design/graphic design expert.He also owns 50% of the company and is also entitled to offer suggestions on how to move the company forward.

Your refusal to entertain a price increase or to go for bigger projects has obviously demotivated him to such an extent that he is losing interest in the company.

You are operating a year now and your partner feels that he can up his game and design and fulfil these bigger projects.By getting quotes from other companies he has tried to show you the potential revenue that can be brought in to the company.Though as his business partner you are totally against it because of "company infrastructure and support in place" as you said.

The danger of turning away bigger projects is that effectively your also turning away the smaller projects that could come up as well. If he is willing to put in the work my advice would be to go for the bigger project, it will test your partner and he will then hopefully get his ambition back and start working more hours.If he fails to deliver through lack of work ethic etc etc well you can have the little chat with him about selling his shares.If it is a success it can only be good for the future of the company and everybody is a winner.

You have to move the company onto the next level at some stage so that a decent wage can eventually be drawn.

What better time than the present.Best of luck.

paulfeeney

It sounds like things are ready to move on but you're not in agreement with your partner as to how this could happen. I think its best to err on the upper side of quotations in your scenario and also, not to read too much into 10am starts and 5pm quits, if the work is being done. This type of focus is a classic management trap that many fall into. As previous posters conclude, you need to talk with your partner and talk fast. Find out where you both want to bring the company next and merge both your expectations into one set of goals and targets, for the next year, two years and maybe even five years.

It seems apparent now that you both want different outcomes from the business OR your expectations have drifted from when the seeds of the business were first planted. You need to talk to each other and fast: before what pulled you together, pulls you apart (expectations).

On a separate issue, I have an idea and quite a bit of groundwork done on setting up a Green Print magazine - I've got experience, I've got writers (Ireland and UK) and some advertisers but don't know how to take it to a next stage. I tried 'Ireland's largest contract publisher' but they spoke once to me and have been ignoring my calls and mail since.

blue4ever

What do you want a contract publisher to do exactly?

Print, source copy, ads, design, publishing?

paulfeeney wrote: »

It sounds like things are ready to move on but you're not in agreement with your partner as to how this could happen. I think its best to err on the upper side of quotations in your scenario and also, not to read too much into 10am starts and 5pm quits, if the work is being done. This type of focus is a classic management trap that many fall into. As previous posters conclude, you need to talk with your partner and talk fast. Find out where you both want to bring the company next and merge both your expectations into one set of goals and targets, for the next year, two years and maybe even five years.

It seems apparent now that you both want different outcomes from the business OR your expectations have drifted from when the seeds of the business were first planted. You need to talk to each other and fast: before what pulled you together, pulls you apart (expectations).

On a separate issue, I have an idea and quite a bit of groundwork done on setting up a Green Print magazine - I've got experience, I've got writers (Ireland and UK) and some advertisers but don't know how to take it to a next stage. I tried 'Ireland's largest contract publisher' but they spoke once to me and have been ignoring my calls and mail since.

paulfeeney

Would want the contract publisher to publish it....Provide experience, advice and some buffer for that critical time when most new magazines fail - Take off or the first three months. I would also like to run ideas by someone who has already done it to assure me I'm not chasing a lead balloon. It feels so right yet I don't know where to take it next...?

redroar1942

I hope the OP gets back to us on this. I dont think the replies he's got are what he was expecting, might be doing a bit of soul searching.

paulfeeney

Apologies to the Original poster - I should have started a new thread for the magazine idea..........

bistro

paulfeeney wrote: »

Apologies to the Original poster - I should have started a new thread for the magazine idea..........

Dont worry about it!:)

Just a big thank you to all who posted your solutions / opinions on here. I have taken them all on board and have come to the conclusion that i need to adapt to make this venture work properly.

Since the original posting, i have worked through a lot of sh1t with my business partner and alas, there appears to be a resolution in sight. I guess maybe i was venting a little last week with the original post without taking a proper look at my apporach to things!

Thanks all again for that suttle cyber kick in the hole!!:D

redroar1942

Fair play, I hope things work out for you.