HELP! New team has growing pains, need advice

in Forum: Everything we missed with the other categories

Post a new topic

Nov. 20 2008 at 7:32 PM
Posted by: uosmiley “Quote Reply
I have been working on building a business for the last three years, taking classes, developing a business plan, etc. Over the years I've met individuals with various qualifications that were good fits to augment my own capabilities, and currently have a team of three other people who are helping to build the business. We are now getting to the point where things are really starting to go, and we are encountering issues with un-even contributions to the business, etc. The issues I'm strugging with are: 1. We've operated generally along the idea that we would try to split things up evenly. That being funding, responsibility, etc. It is now clear that contributions will always be uneven, and we need a system to determine how to valuate individual contributions in terms of both money and sweat. 2. For financial contributions, what is the best way to "secure" these for the contributor? Are we better off having them "micro-invest" in exchange fo ra part of the company, or treat it as a loan. 3. How do I secure my own position as found of the company? I've heard that I should keep 51% to myself. I may have dropped the ball here as the most recent discussions have left it at 28% for me with 24% for the other three. 4. What kind of agreements should I use to secure the others positions in the company? Any help or insight is greatly appreciated as I feel like the wheels might fall off the bus just as we're getting somewhere productive!
Nov. 20 2008 at 11:21 PM
Posted by: CraigL “Quote Reply
You may want to study the various document templates on "sweat equity" agreements. Here's one site that gets into it pretty nicely: "The Shareholders Agreement" You can do a search for "sweat equity" or "partnership agreements." The main problem we see here on SuN, as well as across the entrepreneurial spectrum, is exactly what you're bringing up for discussion. You start with friends, want to make a business, feel like you should be equal, and things don't work that way in reality. One rule for you to keep in mind is that in most cases you can either be friends with someone or you can be the boss. You rarely can be both. That being said, partnerships can much more easily be harmonic with friendships. A partner is one thing. An employee is very different. I'll never forget the very first time I had to deal with this, before even becoming a professional musician. I was in highschool, had just purchased my first keyboard, and because keyboards were sort of new (electronic organ), I ended up in three bands at the same time. One band was based on long-term friends, all of whom wanted to get into rock and roll. Another was a sort of rag-tag practice band, and the third was with some older guys who fully intended to go out and play for money. Within a matter of months it became apparent to me that I couldn't sustain all three bands, and had to go with the professional one. I had the talent, and that band wasn't interested in my friends. So I had to tell those friends in the long-term buddy-band that I was leaving. Talk about pissed! Jeez....! Nobody wants a confrontation, excepting people who enjoy bar fights. All of us would prefer to get along. But life doesn't work that way. Without being assertive, aggressive, and standing for your own best interests, you'll be run over by a truck every time. You're likely going to have to have a meeting and tell the friends who aren't contributing "enough" to be equal, that they won't be able to be partners. You may lose them as friends, but you may not. Often, over time, people grow wiser and have a better perspective. Even so, it's going to be a hard situation. Edited by: CraigL - Nov. 20 2008 at 11:22 PMCraig Landes --- Defining the undefinable. "There are 10 kinds of people in the world---those who understand binary numbers and those who don't." - Unknown International Society of Curmudgeons
Nov. 21 2008 at 8:09 AM
Posted by: vwebworld “Quote Reply
The "how" depends upon the business structure you have selected (or will use)... a corporation or partnership. Each "handle" ownership differently. However, in general you can agree to an ownership % regardless of the cash or effort contributed. ~Roland Web Design \| Golf videos \| ecommerce articles \| Golf Lessons