My business partner wants to leave our failing business and expects compensation. How do I proceed?
My business partner and I set up a business 18 months ago to sell on Amazon. We did all of this on a low budget - $2.5k each to start out with inventory and everything thereafter we have used the returns from the business to sustain it.
Since then, times have been tough. We've received a string of fake reviews that we refuse to participate in and our products are not selling well.
Shortly after we started the business as 50/50 partners, my business partner took a part-time job, which became a full-time job, and then a relocation back to his home country for a full-time career. He insisted we carry on as normal. 6 months into this new arrangement my partner hadn't really participated in any of the business dealings, so we restructured to 75/25 ownership with me having control of the 75%.
The business really hit stormy waters in Q4 of last year and as a result, we barely made a profit on the year at all.
I have worked full-time and always put 100% of the money back into the business and never taken a penny. For the difference in work being put in, my partner laid out a scenario by which the business would owe me a modest wage for those 6 months. As such, I am owed $7k by the business still.
The business currently has $5k in the bank. $1.5k due to be paid in a week. It has about 2,000 units of inventory (1,500 or so priced at $8 and 500 or so priced at around $25). Unfortunately, none of these sales are currently proving to be very profitable due to various unfortunate reasons on Amazon, which aren't super relevant to this conversation other than the fact the business may not have much more of a future on the platform. A restock for the $8 product will cost us about $3k and the higher-priced product usually about $5-7k. Of course, we don't have enough in the bank to restock both right now. With admittedly a very small amount of detail about the business, one company valued our business at literally $1k. They don't know about inventory, money in the bank, social media presence, or email lists, etc. that the business has, however minimal those are.
After all the recent debacles, I was discussing with my partner how we're going to get this sorted out when he told me he wishes to leave.
The whole situation is frankly a mess and we have not done things right and experienced sensational bad luck. However, my business partner is expecting compensation as he departs the business and has pressed a few times on how we plan to sort this. I haven't given a straight answer but did suggest briefly what is there to give. This seems to have caused upset.
But frankly, I don't know what there is to give.
What should I actually be giving to my business partner as he exits the frame? I don't want to short change him, I don't want to offend, I don't want to affect our friendship going forward. But equally, I don't want to leave the business in a worse position to try to come back from.