Barbers partnership ending

rionn

Hi I'm looking for any advice regarding leaving a partnership. I've had to leave my partnership as myself an my partner had a few differences..

I'm really confused now tho as our account has just told me that all I will be getting back from our business is 1300, when I invested 5000 in it.

He has done the accounts and that's what he has come up with.

The business is thriving and I helped to grow it.

Is this the norm do I now just except it and move on.

Thanks guys in advance
Marie

antoinolachtnai

He is valuing the business at €2600 so? It has to be worth a bit more than that.

I think you are going to have to get a solicitor.

You may be entitled to have the business liquidated and sold. This is likely to be the technical legal position.

You could offer him 2 grand for him to leave if that’s all he really thinks it is worth. But I think that you might need someone on your side (solicitor or accountant or experienced business person) to help you negotiate.

In practice it is important to keep a grip on the business, work there regularly, take your pay and share of profits and so on until this is resolved. This will not be much fun.

rionn

antoinolachtnai wrote: »

He is valuing the business at €2600 so? It has to be worth a bit more than that.

I think you are going to have to get a solicitor.

You may be entitled to have the business liquidated and sold. This is likely to be the technical legal position.

You could offer him 3 grand for him to leave if that’s all he really thinks it is worth. But I think that you might need someone on your side (solicitor or accountant or experienced business person) to help you negotiate.

In practice it is important to keep a grip on the business, work there regularly, take your pay and share of profits and so on until this is resolved. This will not be much fun.

Hi thanks for the reply..

It's our accountant that has valued it at 3000 so he said I half this with my ex partner in his opinion but the stock alone would come to 3000, meaning barber chairs wash basin etc.

sysprogrammer

sorry you are going through this over Christmas rionn.

Is does not sound like that person is your accountant. I would keep them on side but no longer tell them your thoughts.

Can you find someone to give you the correct legal advice and then you can leave it up to them.

Antoin's advice is excellent.

best of luck

rionn

Thanks guys for your input, it's really appreciated!

I asked her to sell it to me but she wouldn't sell it.

She didn't want me to go but I was the one doing all the work and a lot of customers had mentions that to me.

She would do one client an hour, me 3 to 4, I asked her could we take in our own money but she wouldn't have it.. she also paid her daughter a salary on a Sat when we didn't need her but she felt it was needed.

These were the main reasons I had to go which wasn't an easy decision but rather than argue every other day I decided enough was enough.

Thanks again
Marie

cannotlogin

Is this the accountant you both have been using?

If so, you need to get independent advice?

Also ask what is the basis of the valuation of the business 50% of balance sheet, multiples of ebitda or turnover etc?

If you share the turnover, profits, net worth, please will be able to give you better guideance.

enricoh

Ask her how much she will sell her half for. Whatever number she comes out with, thats what you should sell your half for.

rionn

cannotlogin wrote: »

Is this the accountant you both have been using?

If so, you need to get independent advice?

Also ask what is the basis of the valuation of the business 50% of balance sheet, multiples of ebitda or turnover etc?

If you share the turnover, profits, net worth, please will be able to give you better guideance.

Thanks cannotlogin

This is really helpful when I ask our accountant about this he just says he's done the maths and this is the figure I'm entitled to.

We used this account with our partnership agreement,tax etc I'm nearly sure they were not friends to begin with so I'm shocked at how unhelpful he was.

I said I am shocked I at least don't get my money back as the business has grown massively in the last 7 months.

He was like this is the figure I will sit down with you to go threw it but that's the figure

Best regards
Marie

rionn

enricoh wrote: »

Ask her how much she will sell her half for. Whatever number she comes out with, thats what you should sell your half for.

I'm worried now as when accountant rang he said that the business seized on the 14th of December..

I've not signed anything as I was told the accountant had to do his bit first.

Does this mean I can't do anything now with this little some been given back when the business is thriving.

Thanks!!!

antoinolachtnai

Unfortunately you are going to have to respond to your partner's aggression. You will have to be quite aggressive here to get what you appear to be entitled to.

What do you really want to do?

You need some help and advice here urgently from an experienced business person.

rionn

antoinolachtnai wrote: »

Unfortunately you are going to have to respond to your partner's aggression. You will have to be quite aggressive here to get what you appear to be entitled to.

What do you really want to do?

You need some help and advice here urgently from an experienced business person.

Thank you

I'm going to get professional help as soon as they open in the new year.. is bad timing with the holidays 😠do you think I should ask he directly first how much she's willing to give before I seen professional help just I hate fighting and in a small family home town I don't want people thinking I'm greedy ..

pedroeibar1

rionn wrote: »

Thank you

I'm going to get professional help as soon as they open in the new year.. is bad timing with the holidays 😠do you think I should ask he directly first how much she's willing to give before I seen professional help just I hate fighting and in a small family home town I don't want people thinking I'm greedy ..

I too agree with Antoinol's advice.

Your business partner is trying to bounce you into a situation and is using the holiday period to their own advantage. You have already been taken advantage of (ref. hiring her daughter) and are on the back foot. Tell the accountant that you do not accept any of his proposals including the statement that the business has ceased trading. Surely this is one of the busiest times of your year? I have doubts on the fairness of the accountant. Who is he working for? You? Your partner? The business? I suggest that he’s working for your business partner as she is paying him.
You should consider the business, its worth and your interest in continuing on your own/with another. If you really want to continue and you believe that the business is worth more than the 1300 you have been offered for 50% , I would as a holding measure offer her the same amount for her share.

What you now need to do is (a) sign nothing, (b) get a copy of all documentation (agreements, receipts for purchases, creditors, leases, whatever is associated with the business) and organize it. Then, when you have all that documentation ready you need to see – preferably - an accountant in the New Year. Not much point in the additional expense of a solicitor at this early stage, that might have to come later if you think it is worth it. Don't worry about having to fight, people will respect you for standing up for your rights (even in a small town!)

Do the documentation stuff now, then forget about everything until the New Year and enjoy Christmas.

rionn

pedroeibar1 wrote: »

I too agree with Antoinol's advice.

Your business partner is trying to bounce you into a situation and is using the holiday period to their own advantage. You have already been taken advantage of (ref. hiring her daughter) and are on the back foot. Tell the accountant that you do not accept any of his proposals including the statement that the business has ceased trading. Surely this is one of the busiest times of your year? I have doubts on the fairness of the accountant. Who is he working for? You? Your partner? The business? I suggest that he’s working for your business partner as she is paying him.
You should consider the business, its worth and your interest in continuing on your own/with another. If you really want to continue and you believe that the business is worth more than the 1300 you have been offered for 50% , I would as a holding measure offer her the same amount for her share.

What you now need to do is (a) sign nothing, (b) get a copy of all documentation (agreements, receipts for purchases, creditors, leases, whatever is associated with the business) and organize it. Then, when you have all that documentation ready you need to see – preferably - an accountant in the New Year. Not much point in the additional expense of a solicitor at this early stage, that might have to come later if you think it is worth it. Don't worry about having to fight, people will respect you for standing up for your rights (even in a small town!)

Do the documentation stuff now, then forget about everything until the New Year and enjoy Christmas.

Thank you so much for taking the time to reply it is really appreciated.

I'm taking all on board ☝️🀞

Avatar MIA

Have you sight of the accounts?

That there are assets valued at more than 3k is not the full picture, what does the business owe? Rent/Rates, supplies?

What are the resale value of the assets? A lot less than €3k?

However, you seem to have very little say in how the business is run. You've asked for the sales to be kept separate and accepted her refusal... why? Has she sole control of the till?

She can deduct get child's salary from her % of the profits. What written agreement have you between each other?

She's walking over you because she is assuming control.

Avatar MIA

rionn wrote: »

Hi been trying to negotiate with her threw text as she is very manipulating and it would end up in an arguement..

This is her reply ��

First of all I'd take those down. You're showing private conversation and your picture. There are names mentioned as well which would identify the participants.

Did she clarify 're the breach of contract?

ED E

That post is totally identifying. Delete it quicksharp.

cannotlogin

Posting private messages isn't the way to go. A quick google would suggest you are in Donegal, I can guess both of your names. I would suggest you remove it.

You need to speak to some one with business acumen and expertise who can review the accounts and give you the correct advice.

I don't mean to be negative but you clearly need to get a better understanding of running a business, financial accounts etc before you set up again with someone else.

punisher5112

Op you need to stop contacting and as above remove names.

You need to seek advice and also are you happy that she has taken full control?

Is there any way to stay as a silent partner or is the relationship far past this.

Have you been getting a decent wage from this venture?

I wouldn't be happy the way she has taken over unless you were happy for that to go that way.

Avatar MIA

Looking at the picture of the barbers shop there's not much in the way of assets, so basically the value is probably in goodwill.

Can you reopen somewhere else and be your own boss and claim back your customers? Make sure you don't sign a non compete.

It's hard to help you further as you've not answered questions asked to help.

rionn

cannotlogin wrote: »

Posting private messages isn't the way to go. A quick google would suggest you are in Donegal, I can guess both of your names. I would suggest you remove it.

You need to speak to some one with business acumen and expertise who can review the accounts and give you the correct advice.

I don't mean to be negative but you clearly need to get a better understanding of running a business, financial accounts etc before you set up again with someone else.

It's okay I like constructive criticism,

I've deleted it sorry guys I needed advice but went the wrong way about it

rionn

punisher5112 wrote: »

Op you need to stop contacting and as above remove names.

You need to seek advice and also are you happy that she has taken full control?

Is there any way to stay as a silent partner or is the relationship far past this.

Have you been getting a decent wage from this venture?

I wouldn't be happy the way she has taken over unless you were happy for that to go that way.

Thanks for the reply!

She was never in this for money more of a hobby as they have a good family, but she doesn't work hard enough her clients are in the chair for over an hour and I found this hard to split the money & she wouldn't agree to me taking in my own money.

I could think of been a silent partner, as I feel the business is worth more than €1700

Thanks

rionn

Avatar MIA wrote: »

Looking at the picture of the barbers shop there's not much in the way of assets, so basically the value is probably in goodwill.

Can you reopen somewhere else and be your own boss and claim back your customers? Make sure you don't sign a non compete.

It's hard to help you further as you've not answered questions asked to help.

Thanks MIA

It's in our contract that the other can't open up within 30 miles.

Is this goodwill her decision? If that's the cause I'd should not waste any more money on a accountants,. As she seems set on the amount

Avatar MIA

rionn wrote: »

I could think of been a silent partner, as I feel the business is worth more than €1700

How is that going to work. Would you expect her to hand over 50% of her takings if you do none of the work?

rionn

Avatar MIA wrote: »

First of all I'd take those down. You're showing private conversation and your picture. There are names mentioned as well which would identify the participants.

Did she clarify 're the breach of contract?

She said i didn't give the 3 money notice required, but she typed up that she would offer me early etc if I decided to leave but I didn't sign that.

rionn

Avatar MIA wrote: »

How is that going to work. Would you expect her to hand over 50% of her takings if you do none of the work?

No but I could get someone to rent a chair for me and pay them a wage

Avatar MIA

rionn wrote: »

Thanks MIA

It's in our contract that the other can't open up within 30 miles.

Is this goodwill her decision? If that's the cause I'd should not waste any more money on a accountants,. As she seems set on the amount

Okay, I'd take the €1,700 on the proviso the 30 mile limit is removed.

If not acceptable I'd go into work and control my own takings, she's surely breached any agreement by unilaterally taking on her own child as a paid employee.

Avatar MIA

rionn wrote: »

No but I could get someone to rent a chair for me and pay them a wage

And what would you do?

Avatar MIA

rionn wrote: »

She said i didn't give the 3 money notice required, but she typed up that she would offer me early etc if I decided to leave but I didn't sign that.

A 3 month notice? Hard to tell what the implication or enforceability of that without seeing the full contract.

rionn

I'm beginning to think I should have went to an accountant & not wrote anything on here as it is so public.. It is bad timing with the holidays!

rionn

Avatar MIA wrote: »

And what would you do?

Work for an employer, I think could be best

rionn

Avatar MIA wrote: »

Okay, I'd take the €1,700 on the proviso the 30 mile limit is removed.

If not acceptable I'd go into work and control my own takings, she's surely breached any agreement by unilaterally taking on her own child as a paid employee.

Thank you,

I'm grateful of your opinion and I feel that could be the best idea yet, set down my owe ground rules..

For me it is lesson learned

c.p.w.g.w

Avatar MIA wrote: »

Okay, I'd take the €1,700 on the proviso the 30 mile limit is removed.

If not acceptable I'd go into work and control my own takings, she's surely breached any agreement by unilaterally taking on her own child as a paid employee.

That stuff about not being open with x- amount of distance, isn't legally enforceable in Ireland apparently. But you solicitor should be able to confirm that

martyoo

You can request that the thread is anonymised.

It's hard to know what the best route is to take but for a €1700 offer I would be staying involved in the business as much as possible.

I'd question who the accountant is really working for.

rionn

martyoo wrote: »

You can request that the thread is anonymised.

It's hard to know what the best route is to take but for a €1700 offer I would be staying involved in the business as much as possible.

I'd question who the accountant is really working for.

Thanks Martyoo

I've going to spend spare my time thinking if I can go back and work with her..

rionn

martyoo wrote: »

You can request that the thread is anonymised.

It's hard to know what the best route is to take but for a €1700 offer I would be staying involved in the business as much as possible.

I'd question who the accountant is really working for.

Martyoo how do I request it to be anonymised?
Thanks
Went on full website an requested it ��

Avatar MIA

rionn wrote: »

Work for an employer, I think could be best

Okay, but you're going to have to pay minimum €9.35 plus 10.85% er prsi. You will also need to pay them holidays, possibly sick pay.

You'd then have a minimum wage employee compete against the owner for new businees, would your ex clients rather a newbie or your partner to cut their hair?

Your previous takings are unlikely to be maintained employing a new barber even before you deduct their cost.

martyoo

Think you need to contact a moderator of this forum.

rionn

I think I'm going to go with Martyoo way an go back into work with my own rules:
1 we both pay towards the bills a % but take our own money home.

2 I'm not paying towards her daughter's wage

3 I'm my own boss not been talked down to by her

Thanks MIA I appreciate your input xx

Avatar MIA

rionn wrote: »

I think I'm going to go with Martyoo way an go back into work with my own rules:
1 we both pay towards the bills a % but take our own money home.

2 I'm not paying towards her daughter's wage

3 I'm my own boss not been talked down to by her

Thanks MIA I appreciate your input xx

Yip, agree that's the best way to go.

punisher5112

How has the venture worked previously?

Did you have clients or just share.

Does one do say hair and other beauty etc.

If the relationship hasn't gone sour then you should obviously consider going back to work and start making money.

If she wants rid she may well then try and give you more or could make it very difficult working alongside.

rionn

The business is going good, clients went to whichever barber was free. We offer hot towels, Indian head massage..

The place looks amazing now through my partners hard graft, setting flooring, painting rec.

I'm going to find it hard going back but I think that offer has made my decision..


Really appreciate you guys for taking the time to reply to my worries and concerns!!

Sleeper12

rionn wrote:

This is really helpful when I ask our accountant about this he just says he's done the maths and this is the figure I'm entitled to.

Just because the business is busy doesn't mean that it's worth a lot. You can be busy yet paying almost all as wages. It could be a successful business in that you get a wage & you have a job but the business might not make a profit. When the accountant valued the business he /she only takes in the profit and not the turnover. Your wages isn't profit. It's an expense.

I can't say if the accountant is right or wrong based on the information you provided but they value the business on the profit. What profit, after wages have you made so far in the business?

rionn

Thanks sleeper12!

We decide to put all our income into having the business expense paid up to date and all the starting business expense paid for as soon as the money came in. This is why we did not take a wage till we were open 6 months to pay for all our expenses.

For the past 6 months we have been putting a steady income into the business is that how the accountant came up with this figure? Though what we've put in the bank?

As in a year from now this business would be worth so much more.

martyoo

I would be interested to see how the accountant valued the business but at the same time you might be overvaluing what you are selling.

As in a year from now this business would be worth so much more

Why would it? The revenue coming in is going straight out again in wages and other costs.

My 2 cents:

Partnerships in business outside of a limited company are a nightmare. They almost always go bad.

If this were me I would simply make a counter offer to what you have been offered, and get away from it with as much as you can get. If you've built up a client base open up somewhere else down the road and start again as a sole trader and bring those clients with you. The partner will probably go bust before long anyway and you can go and buy the stuff off them on the cheap when they do!

Your counter offer could include stock, and equipment to help you start afresh.

A couple of grand might be stressful to walk away from, but the day to day pain of staying in partnership with someone when things are already bad is a lot more stressful and will end up ruining your state of mind and can have knock on effects on your health and other relationships.

As far as trusting accountants to value a business at the level you are at, everyone has and will have a different opinion on how to make a valuation. I believe 'getting professional advice' sounds a lot better in theory then in practice in this situation. You are not hiring Ernst and Young and paying them €20k to do a proper valuation. Theres no set method. SME accountants are usually sole traders themselves will little or no actually business experience outside of their specific expertise of P&L and Balance sheets. They file accounts, they don't value businesses, they are not entrepreneurs, investors or management consultants. I would never even consider asking an accountant to value a business. I do not believe they are qualified to do so.

I am more cynical then most though as I didn't get very nice xmas presents this year!!

antoinolachtnai

In the end, if you think it is worth more, then you should buy out your partner, make her relative redundant and send them on their way. You would need to have to have the funds to do this of course.

Staying as a ‘silent partner’ is honestly a waste of everybody’s time.

I don’t like the idea that you are not getting back anything like the value of your initial investment and that is why I say you should push back.

But ultimately the problem may be that the business is not large enough or suitable for this partnership.

I would try to find a proper resolution for this, not just for the sake of the money, but to try and sort out this relationship with your partner.

rionn

Thank you 🤗

rionn

Thanks EL Rifle!

I've been in contact with a solicitor and have an appointment with him on Friday.

Going through things with accountant today 😏 he has told him that we have no stock but we spent 100's on hair colouring products etc and she's also but in new car tires in as her expense..

Thanks for your two cent it is appreciated!!