Well, I am going to stick with the facts and see who responds.

1. I approached someone I know about starting a business together. I had an expertise that they didn't and they were already in business with another company. There was no Share Holders Agreement, were Ltd, but quite honestly I was wet behind the ears and didn't even know what that was at the time.

2. The presented themselves as being in a position to finance the company, this was required, it involved customers pay a low to no down fee and paying a monthly residual. I didn't have the capital and understood that they did. Well, as I was to learn later, most of their $$$ was tied up in assets, not liquid $$$. I knew exactly what it would take and was always very clear on this, it didn't seem to be a concern of his.

3. I was to do 100% of the work myself and he was to provide the $$$ because in the first year, especially, we would spend more than we took in. In return I was willing to accept 30% ownership and he would take 70%, I'm not greedy and thought that was fair. I just wanted to work at what I loved and have something in the end.

4. I was asked to do up a proposal on what would be needed for the first year and did that handing over a 5 page proposal showing all the figures. It was pretty easy to figure out, I did this for someone else before in a situation where I was the employee and owned nothing. It was just that I left that situation after building up a ridual for them of over $16,000 per month over about 4 years of work and never got a raise, I was financially struggling. That's why I entered into this deal.

5. We agreed and just before work commenced I was notified by him that they had a relative who they wanted to help out. I didn't know this person and stated that if they wanted to give them part of their 70% fine. Remember, no share holders agreement?

6. Work commenced and before 6 months were up we were out of money, not because I overspent, because they hadn't put in even 1/3 of what was in the proposal, I thought we were done for! Remember the relative I mentioned? I later found out that, out of the money that was put in, their relative put in the largest portion of it, over 55%, wow, that sort of shocked me. I panicked and worked real hard, I modified the pricing structured of what I was selling because I didn't want to lose everything and especially their money. I did it and I succeeded!

7. Now after about 5 years they haven't put even 1 cent or 1 hour of work into the business. When I approached the partner he sort of talked to me like I was an ingrate. I was told that I had nothing and was desparate and look how he had helped me out.

8. Now I just want to either get out or buy him out. It kills me to potentially be looking at losing all my hard work. They can't run this business without me as they don't understand it, it's in a very technical field. I never talk to the relative because they don't live in this area and there is a language barrier, that was all his doing, I just trusted, too much I guess. I have reason to believe he will be wanting an unreasonable amount for his share.

Are there any other options to buying someone out. I have asked for an agreement to be done up, but he isn't cooperating with that.

Any advice would be welcome.

first get your own attorney and a CPA.
Get the CPA to do a valuation on the business.
Have attorney draw up the agreement absed on the valuation.
Of course seek their advice on anything else you can do to protect your business.

yes you trusted too much but that is done and over now, move on. When discussing this stick to the facts and leave out the personal/emotional stuff. The facts will support you in getting out of this mess.

Also what was your agreed upon repayment plan for their initial investment? Put it in writing if it isn't already.

Keep copies of all documents drawn up in separate sealed envelopes and write the date issued to the partner across the sealed part. Make sure the date and time run across where you would open the envelope. This gives you an added layer of protection. Do this again once they return any documents signed by them.

The agreemtn should be based on what they initially actually invested into the company. They are entitled to a ROI on that money and that money only. They have not invested any other monies into the business since then.

The agreement I think should start from now and moving forward. Do not have them write one. You be proactive and do it yourself. Do not wait on them any longer. This business is yours you worked it your names are on any legal documents filed with the Government.

Also in the agreement make sure the breakdown of owner ship is at least 51% for you. This is means you have controlling interest in the business.

Since you bought the idea and expertise to the table you should own the controlling share. Your biggest mistake was in undervaluing your knowledge, expertise and experience. They are worth more than the cash invested. Without it there is no business.

Worse case scenario start looking into starting another business without any backers. You have built your reputation within the industry, with vendors, customers, etc. That goodwill is worth money as well but it also means you can restart based on past track record with them.

Good luck from fellow entreprenuer.

Please excuse any typos, not the best typist in the world.

Lisa Douglas, Inklusion PR
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