Starting a business with a friend....

[lisatom]

undefinedWhat is the name of your state?PA.

I really need some advice.

My best friend and i are going into business together. We are opening a massage therapy shop which will offer airbrush tanning and bodywraps as well.
My friend is a massage therapist with a following. She will be doing massages and some tanning and wraps. I will be running the front desk and be doing tanning and wraps as well.We will be hiring a few more massage therapist too.
We have been paying for just about EVERYTHING with MY credit card, knowing that we both will be paying it back equally as we didnt have the cash upfront for everything needed.
My friend thinks that she is the one bringing in the clients and that she will be doing most of the work and bringing in the most money. So she thinks she should have a bigger percentage of the company.
Now i am going to be running the front desk, airbrush tanning and bodywraps also. Plus i have the credit card maxed out in my name only. (Which is scary). I think we should be 50/50 partners.
What do you think???? I really need an answer on this.
Thanks alot

 

[kathrynne]

Is any of this in writing? Like the part about both of you paying the credit card back? The percentages you'll each own? How about the way you'll each be paid?

You REALLY need an attorney! You need to outline EVERY aspect of this business before anything gets a chance to go wrong.

Few things are as potentially damaging to a friendship than lending money or starting a business together. By fronting all the cash to start this business, you're doing BOTH, and I'd hate to see you and your friend on Judge Judy in a few months if the credit card payments aren't getting made as expected.

I don't mean to sound pessimistic, but opening any business can be really rough going for a while. Good luck!

 

[ironbutterfly]

I can speak from experience NEVER go into Business with a friend and if you do HAVE AN ATTORNEY write the contract. You are fronting the money and your time IT has to be 50/50...

 

[ablessin]

Keep in mind also, there are interest charges, so your friend needs to be liable for the BILL, not the CHARGES - - you should consider applying for on eof those American Express small business credit cards, and put BOTH names on it, along with the company name. If possible, transfer your CC balance to the AMEX card.

And heed the above advice regarding the lawyer! You should have a business lawyer ANYWAY, so it's a great time and opportunity to look for one together and be upfront about expenses,etc.

If you want the business to be 50/50 be firm on expressing WHY you think it should be like that! Just because your friend is handeling massages, doesn't mean they should get 60% and you get 40% - because running the desk and handeling the money is just as important.... she'd have fewer clients if you weren't there answering the phone!
It should be equal unless one partner significantely does less than the other, AND both parties agree on this.

You do need to get everything in writing. It'll be your credit report that gets trashed if things take a nosedive.

best of luck to you on your business venture. I truly hope things work out.

 

[enricosuave]

Speaking from my own experience, I'd NEVER go into business with a friend.. they tend to believe you owe them the lion's share on top of their own for some reason. (after all, you're thier friend so you're supposed to be generous to THEM is all I can figure runs through their head.) I've been in your position and in the end I got stuck with ALL the credit card debt and had to claim bankruptcy when the business needed time to make a profit and the partner bailed out on me, leaving me with the mess.

STOP EVERYTHING and if you can't get a contract for 50/50 IN WRITING regarind not only profits but also total EXPENSES you are charging for.. dismantle the biz and sue for existing charges if you have to. Otherwise, as you're already seeing, people's perceptions are always that THEY are putting in more and should get more than you. Roles and responsibilities have to be clearly laid out in writing and notarized.

As long as your friend has access to the business account, nothing prevents them from taking what the 'feel' is their share. Without a partnership contract (available at places on line, Staples, or write it yourself if you can).. you're set up to be royally screwed. Even with the contract, to enforce it you'll have to sue (small claims court is cheaper, but there's a limit to damages) in order to get what your friend agreed to in writing.

Good luck, but if they won't submit to a full 50-50 partnership.. shut it down and see if you can't swing it alone or with a more professionally minded partner.

 

[lisatom]

Thanks for everyones replys.
My friend just so "happened" to find this site and seen what i wrote, and said i did not give the full story. She said she paid for things too.
Ok she bought the banner for $95.00 and the fax machine for $80.00. Anything else then i dont know about it. I think that is it. I have about 3500 charged to my credit card already.
She still thinks she is entitled to more then me, i dont get it but whatever, cause i am taking all your advice and getting out now while i can. You are so right you can not go into a business venture with a friend.Example: feelings get hurt. My feelings are so hurt right now, that she thinks she deserves more then me, that she will be working harder then me, that she should get more then me.We went into this TOGETHER, we should split everything together.But instead it just ruined a relationship, cause i cant look at her the same anymore.I see greed, and trust gone.
So lesson learned, and one big mistake that i am probably going to be paying for, for years.(credit card) Thats MY problem i am to darn trusting.I guess i better get to the bank as soon as possible to get our start up money out-since i provided that too.(our rent and deposit). Thanks for listening to me complain. I come to the boards for that. Unlike my "friend" who tells her family and friends everything, which is another thing that wasn't cool. She is very open about things and i keep personal things to myself, so another reason it wouldnt work anyway.

 

[lisatom]

My friend is going to be posting her side of all this in a little bite. Could you guys read all of our post and let us know what you think. I just want an honest opinion whether you agree with her or me. I just want to get this resolved.Any thoughts appreciated. Thanks

 

[enricosuave]

Sure, I'll be more than happy to hear both sides. However the basic facts remain the same;

-- There was no clear delineation of proceeds contracted prior to the business venture.. thus, all debts and proceeds are shared equally among the stated partners. (In this case, 50% You and 50% Her.)

-- Irregardless of the length of time the business was in play, ALL debts are equally burdened. Thus, the person who fronted the money is now due 50% recompense for all expenses incurred, including credit card interest charges. (Not just principle borrowed.) Also don't forget any lease penalties owed or deposits lost.

Personally, I'd give her about two months (max) to show real effort to repay the calculated amount back. If I saw no money coming, I'd not hesitate to enter the local County Clerk's office and file for a Small Claims Court hearing so as to get a Judge's decision on the matter. (Which is likely to be what I described above, but from a Judge.) From there, with the judgment, a garnishment or lien against owing party's paycheck, bank account or future car/home loans will be levied until the amount is paid in full.

Real friends make good on their promises, soon and not 'someday' to leave you hanging with the credit card payments. If you're not getting steady cash in hand (only excuses and promises).. let the court do it's job by enforcing what is proper in this case.

 

[busygirl1274]

i am the friend...

We decided to go into business together..but i have gone to school to getr the training for massage and i am helping her with the tanning and body wraps so she can make money for the company as well. I talked to a previous boss of mine when she called to congratulate us on our venture and simply asked her how she and her partner worked things in the begginning. She said something similar to my thoughts..her and her partner worked on their clients and the paycheck at the end of the week was 50 percent of their earnings and the other half went into the business for expenses. what they had left over they took a draw of $100.00 each and that was how they split it. I merely mentioned this to my friend and she immediately freaked out and said she does not want to do this anymore..i am leary about starting a business with someone i cannot even talk to without the threat of her not wanting to do it anymore. so in response i took about an hour to think things through and called her with a proposition that i would hand her a check for the total amount due on her card and all the things we paid cash for ..ex..furniture. then she would not have to do it anymore.. then her husband called me to yell at me which i found unnecessary because it was not my decission to have her quit in the first place, but i'm not comfotable working all day on clients just to hand over half my check to her..i think the profits are what should be split and in me saying this she thinks i think i'm better than her, that's not it. i started out making very little money in the beggining and she will too, but i dont think it's 50/50 if i'm the one bringing in most of the money and i am giving half to her and still paying half the bills. maybe i'm wrong please help us..thanks i am not trying to screw her at all, but i also need to look out for myself.

 

[lisatom]

Why do you keep saying YOU are the one going to make most of the money? I will be working too.
Why do you say you are paying half the bills? Wont i be paying half the bills also?
And about my husband calling you, i said sorry about that. I DID NOT have him call you, i wouldn't do that, i think he is concerned about being stuck with credit card bills.
We went into this as equal partners on EVERYTHING, now why do you want to change the profit to not being equal also. I have to pay for everything equally just as well as you.
I think what ever you and i make TOGETHER should be put together say for the week, we pay the bills and things needed for the shop, put some in the bank account then we take home an EQUAL paycheck, regardless if you do more massages in a week or i d0 more bodywraps in that week. Thats what a partnership is right?
You knew from the very beginning that i dont have training in massage, it wasnt a problem for you then to still want me as your partner, now all of a sudden you thing i wont be of much value.
I lost a perfectly good job for us, put in many many hours for this and lots of money, now you think we arent equal partners.I know you did too, but i'm not saying you should make less then me. It needs to be qqual. It's so sad to be losing a friendship over this.I hope someone can help us come up with something we both can agree on. athough i really dont see how it should be anything else but equal

 

[HomeGuru]

Can you two pick up the phone and talk. Geez, we do not want you both using this website forum having to read about your arguing and bickering.
Go offline now.

 

[lisatom]

sorry homeguru- we cant even talk to each other right now.
But if someone else can help us out it would be appreciated.
If not then please dont respond at all THANKS

 

[HomeGuru]

sorry homeguru- we cant even talk to each other right now.
But if someone else can help us out it would be appreciated.
If not then please dont respond at all THANKS

**A: OK, then email each other and leave this website.

 

[lisatom]

Seriously , if we did that how would anyone be able to help us out. I'm sorry if it bothers you-just dont read it and why take all this time to keep responding. Not looking for a fight from you, got my own problems to deal with.

 

[HomeGuru]

Seriously , if we did that how would anyone be able to help us out. I'm sorry if it bothers you-just dont read it and why take all this time to keep responding. Not looking for a fight from you, got my own problems to deal with.

**A: because this is not a DR. Phil type of website.
You both sound like kids.