Scenario: You started a 50/50 business with your best friend. You're doing all the work...
Hey Indie Hackers, I have a scenario for you.
You started a 50/50 business with your best friend. You split the profits and the ownership 50/50. You did not sign a partnership agreement yet. You've been working together for about 6 months now.
It started out great, you worked out business plans together and everything was fair.
But after the first few months, you realized a pattern: you're handling all the legal and financial stuff, you're acquiring all the clients, and you're doing more client work than your partner.
It feels like he is your partner when you talk about ideas, but they are mostly your ideas anyway. He shows very infrequent business initiative.
He is your best friend, but now it feels like he's an overpaid employee, taking 50% of your profits while doing ZERO business / financial work and only doing about 30% of the client work.
Remember, no partnership agreement was signed. The business is established as an LLC partnership, with both of you as managers.
What would you do in this situation?
This sounds like a déjà vu for me. It happened exactly the same way for me, TWICE.
Lessons learnt:
If I were in this case (Again! please no). I'd talk directly to my friend, understand what's going on if Y/N they are still willing to work at some point.
Try #3 again, for the last time.
And take a decision meaning moving on with a real doer.
I hope the story ends well :)
Get His/Her opinion in the current state of the situation.
Decide what is more important to you. The business or this friendship. The business and the friendship as well can live on If both of you desire to. Projects are started and killed many times every day.
Since he is your best friend I'd suggest the first step is to talk to them about how you feel. A good friend would not want to take advantage of you but even a good friend can sometimes not realise the effort imbalance in a business.
If they aren't keen for change then really all you can do is accept that they are going to make more for less and know in the future that you should include a vesting plan or dissolve the company and move on. The former is if you want to keep the friend. In the later situation odds are you won't be friends anymore so decide what is worth more to you.
A few thoughts.
Can you live with it being 50/50 ownership with an uneven work load?
What is your partner's role? Is it crucial? If it is, maybe the deserve the 50% on other merits.
If not, what would 'moving on' and signing a 'no claim' look like?
If you want, send me an email and I'm happy to share personal ancedotes 'off the record'
Everything can be renegotiated. Just understand what your BATNA is and think through the incentives of each strategy and come up with a plan he may go for and just have the conversation super casaully without getting worked up about it. Come to a new agreement based on this new information.
You're only stuck with it if he says no. In which case you walk and his equity is worth zero.
I've been in a similar situation that was 1/3 1/3 1/3 and that last third was effing worthless. I was younger back then.
This comment was deleted 7 years ago