Need some business advice

I will make this post vague, as I do not want the person it pertains to to possibly stumble upon this... Anyways, here goes:

A few years ago I had an idea to start my own business, I asked around, including family and no one wanted to go in with me. An extended family member decided that they would. I purchased the domain name, programmed all of the code, both for production, product name, sought out suppliers, etc, etc. This person contributed only a few hundred dollars and pretty much has done nothing that was asked of them. In fact, I have spent several thousand dollars trying to get this up and running and have literally stayed up into the wee hours of the morning for months putting everything together. Equipment was purchased and I bought approximately 90% of the costs. This extended family member does not manage money that well and bounces from job to job, and really has no money per se. Not only that but they have massive fiscal issues that I won't go into here.

So, in the past two years nothing has been done, literally nothing. Some bad #, due to their own irresponsibility hit this person and they claimed they had been depressed when I called them on it. In the mean time I have been working my ass off. I finally broke down and asked around again to see if someone would be interested in going in with me as I required capital - money was getting thin. This time a blood relative stepped up to the plate and said they would help out, plus they have skills that I really need. They literally have been busting ass, and putting in $$$ with no questions asked.

Here is where I am at. Everything up to now is in MY name, all art work, domain info, custom coding, you name it, its in my name. Myself and the person now helping me have finally completed a prototype product that is bad ass and we know its going to sell like hotcakes. Here is the problem, or perhaps not? Does the original extended family member have any rights to anything done while he was with me half assed? Nothing in writing exists that we were partners, and he has been talked to repeatedly about getting his # together which they never did. At a max he gave me a few hundred dollars and thats it. I think they were looking for an easy payday while I shouldered all the costs and risk.

I need to move on, and will probably offer them double the amount of money they contributed and give them the equipment that was purchased (relinquish my percentage), and call it square.

What happens if they tell me to pound sand? Basically its either they get paid out, I let all my paperwork expire (which I do not want to do) and then refile, or have them buy me out - which is going to cost several thousand dollars which I know they do not have. The flip side is I could be a dick, or at least bring it up, if they give me #, as nothing is in their name, etc. Also, if they do accept the money as a payout should I get them to sign something, or should I steer clear of this since technically they are not on anything (paperwork) with regards to the project? Thoughts appreciated. Thanks!

It's all in your name so you're safe.



Just give them their money back and tell them the business went nowhere, then make it go somewhere.

If they ever ask why it went somewhere, tell them you decided to get it off the ground again.



If they ask why you didn't include them the second time, tell them you prayed to God and he told you so.

Originally posted by Unrealised
It's all in your name so you're safe.



Just give them their money back and tell them the business went nowhere, then make it go somewhere.

If they ever ask why it went somewhere, tell them you decided to get it off the ground again.



If they ask why you didn't include them the second time, tell them you prayed to God and he told you so.

Yea, that last sentence may actually work..

Thanks. What if they do find out it went somewhere, I don't think they would sue me, but stranger sh!t happens. I am hesitant to have them sign a paper relinquishing rights since that implies that they HAD rights to begin with, yet the catch 22 may be if they decide to take this the distance and sue, the courts may want to know why nothing was signed. Maybe I am over thinking this, but I have worked very hard and I do not want to get f@cked...

reply to post by pityocamptes

Nothing in writing exists that we were partners, and he has been talked to repeatedly about getting his # together which they never did. At a max he gave me a few hundred dollars and thats it. I think they were looking for an easy payday while I shouldered all the costs and risk.

I need to move on, and will probably offer them double the amount of money they contributed and give them the equipment that was purchased (relinquish my percentage), and call it square.

Depends on where you are residing, but I think that you answered your own question in your quote above.

Double the money (plus) should be more than sufficient if your bizz partner did as little as you said he did. I think you are almost being *too* generous in the time and pain caused by this investor, but only you know your situation...

I truly hope things continue to work out for you and your venture. In my experience, it is always better not to mix business with pleasure, or relatives, but to each his own...

May you go forward and prosper...

not being business savy,i would pay that person what they contributed initially,long before you go into production.
get them to sign and end of contract,and a repaid in full contract with whatever profits that were promised to them.
then you should be ok. ya you have to pay now,but its better than paying later!
always start with a contract with investors,as to their obligations,and yours as well.
and make it as descriptive as you can,so some points can't be bent!
best of luck to you!
peace

Hey thanks! I will go with that. No, my new partner is actually blood, as in bro's, and he works his ass off. Plus, we can openly rip each other a new one, cool off and drink a beer - so to speak. I don't really have to walk on egg shells and can be 100% open, whereas the other situation was an extended family member and at the risk of pissing people off I usually had to skirt issues in a nice way without flat out saying what was up (though towards the end I could not bottle it up anymore and it caused some hurt feelings)... I think its best all around.

How would you approach this, with regards to letting the extended person know its over? I think they somehow think things are still in their favor as they ask questions about whats going on. They were pissed from what I understand when they found out I was working with someone else who is dedicated to getting the job done... kind of a strange person... I just want to keep the peace and a friend... thanks again!

Originally posted by reficul
not being business savy,i would pay that person what they contributed initially,long before you go into production.
get them to sign and end of contract,and a repaid in full contract with whatever profits that were promised to them.
then you should be ok. ya you have to pay now,but its better than paying later!
always start with a contract with investors,as to their obligations,and yours as well.
and make it as descriptive as you can,so some points can't be bent!
best of luck to you!
peace

Eventhough no intial contract existed? I was going to do that here a few weeks ago but my sig half told me that that was not cool, especially with "family" as it would cause problems. However, I'm looking at it from a "facebook" type scenario - my sig other said that this person wouldn't do that, I was like how do you know. No one knows the future. So you are saying I should have a legal document eventhough nothing outside of this document (besides verbal) exists? What happens if they tell me to pound sand and refuse to sign?

reply to post by pityocamptes


A partnership is two or more people working together with a view to making a profit. Your family member hasn't worked with you in 2 years so it seems clear that he withdrew from the partnership a long time ago.

The best thing you can do, if you are really worried, is to go and see a business lawyer. He will tell you the best way to proceed. If your prototype product is worth money, it may be the best couple of hundred dollars you ever spent.

Make sure you choose a lawyer who is a business lawyer rather than a jack of all trades that you find on a main street.

By the way, make sure your prototype is patented before you show it to any big companies, otherwise they will just rip you off by stealing it.

Also look into getting royalties for the product rather than trying to manufacture and market it yourself. First movers usually get destroyed by large second movers who see a good idea and steal it.

best thing to do is to see a good lawyer who practices in the field so you can make sure every i is dotted and t crossed to ensure that its as water tight as possible and make sure every part of the process is done properly and a lovely paper trail is left behind so that if you have to goto court you have enough to make your case

Originally posted by pityocamptes

Originally posted by Unrealised
It's all in your name so you're safe.



Just give them their money back and tell them the business went nowhere, then make it go somewhere.

If they ever ask why it went somewhere, tell them you decided to get it off the ground again.



If they ask why you didn't include them the second time, tell them you prayed to God and he told you so.

Yea, that last sentence may actually work..

Thanks. What if they do find out it went somewhere, I don't think they would sue me, but stranger sh!t happens. I am hesitant to have them sign a paper relinquishing rights since that implies that they HAD rights to begin with, yet the catch 22 may be if they decide to take this the distance and sue, the courts may want to know why nothing was signed. Maybe I am over thinking this, but I have worked very hard and I do not want to get f@cked...

If they are broke they won't be able to find a decent lawyer. No lawyer would take on a case like this without a good chunk of cash up front.

They only work on contingency for injury cases, everything else is cash up front.

Take care of this now, before the Co starts making money.

Spend $500 on a lawyer and get the deadbeat out of your life. If you don't fix it now it will cost a lot more to fix down the road.

I would say break down the monies put into the project and apply percentages to those figures. This will demonstrate a specific percentage the investors own of the business. Then make an offer to buy out those percentages owned by the one who is not putting the work into it and only expecting returns. If you wanted to be a jerk about it and everything is in your name you could simply refund the amount invested and tell them thanks for nothing as they have no legal ties to the project. If not then simply let them stay with no further investment or say-so and just give them their percentage of the profits and let them deal with their own taxes. By what you have written you do not want this person having say-so in the project as they have shown they cant handle themselves and with all the work you and the other investor have put into it you dont want the first to bring it down on dumb decisions.

Originally posted by Agarta
I would say break down the monies put into the project and apply percentages to those figures. This will demonstrate a specific percentage the investors own of the business. then make an offer to buy out those percentages owned by the one who is not putting the work into it and only expecting returns. If you wanted to be a jerk about it and everything is in your name you could simply refund the amount invested and tell them thanks for nothing as they have no legal ties to the project. If not then simply let them stay with no further investment or say-so and just give them their percentage of the profits and let them deal with their own taxes. By what you have written you do not want this person having say-so in the project as they have shown they cant handle themselves and with all the work you and the other investor have put into it you dont want the first to bring it down on dumb decisions.

Yes, exactly. I don't want to work my ass off while this person reaps the benefits. The other investor does not want this either. How would you deal with it if the extended family member I am having issues with does not want to take the money, etc? Should I do an ultimatum?

This is the problem with investing with family, The way I see it is when family invests in a business there becomes a separation. If one allows the family and business to remain as one, un-needed issues tend to arise. They may be angry but just point out that this is a business decision and has nothing to do with family, if they can not handle it then they will have to deal with it. KEEP IT SEPARATE.

Another thing you can do, because it began as family investing together or the investment was made due to family, is call a board meeting with both of your investers and lay it all on the table. Notify them this is a business arrangement and as such they need to be invested both in time, money, and energy and make it part of your charter that those who fall behind will be removed from said charter. This will make it a legal contract that enables you to "fire" without legal consequences.(it falls under aggressive take-over)

The thing is, is that in any venture be it business or family communication is a must as well as transparency within the board and honesty of investors.

Originally posted by Agarta
This is the problem with investing with family, The way I see it is when family invests in a business there becomes a separation. If one allows the family and business to remain as one, un-needed issues tend to arise. They may be angry but just point out that this is a business decision and has nothing to do with family, if they can not handle it then they will have to deal with it. KEEP IT SEPARATE.

Another thing you can do, because it began as family investing together or the investment was made due to family, is call a board meeting with both of your investers and lay it all on the table. Notify them this is a business arrangement and as such they need to be invested both in time, money, and energy and make it part of your charter that those who fall behind will be removed from said charter. This will make it a legal contract that enables you to "fire" without legal consequences.(it falls under aggressive take-over)

The thing is, is that in any venture be it business or family communication is a must as well as transparency within the board and honesty of investors.

Thank you. This sounds like a good plan. I will offer the money, and sit down with the offending member and try to smooth things out and reiterate that business and family are seperate. Thanks again!!!

reply to post by pityocamptes


well if that were the case you don't need that kind of investor! back away.
a contract protects all parties,and is a legally standing contact which will stand up in court if tshtf.

reply to post by pityocamptes


I was just wondering if there was an update?