How do I deal with a 50% business partner who can't hold up his promises?
Right now I own 50% of a technology startup aimed at real estate agents. I am responsible for developing and maintaining the upkeep of all the software associated with our business. The other partner is in charge of selling the product, however, he gets way too distracted with other life things such as his real estate work. Although he makes promises and tries to motivate me to keep working on our business because he will "sell the crap out of it", I still don't feel a solid effort on his part. Should I try to find a way to kick him out or continue to engage him to sell our product? Thanks.
Sure you can do ALL that;
Who hold 51% interest in the company?
Hello John, that can be a big concern, but I would review what your initial agreement was, if documented or verbal I only mention because you need make a sound decision that will not hurt your new business venture that is what is important right now. And the right approach is communicate with him face to face and ask him what his intentions ours, and explain to him the level of commitment you need to launch your technology so that the business will grow, especially at this early stage of you launching it. If you don't establish a communication process with him now, you may lose a foot hold on getting him to focus. because the way it seems from your description he does not see the big picture, and the growth you both can experience from your technology.
Quick answers, and definitely not an exhaustive list - just based on my own experience:
1) try to buy his shares back. point here is that he will get nothing without you being involved so question is to be credible in showing your determination in not making any progress until you two find a solution. he might be attracted by the short term gain, but at least you regain control on future earnings.
2) try to find a "buyer" for your project, and you negotiate a deal with the new owner so that you can get a fair deal of the project - for instance: get %%% of revenues for x number of years. expect to loose value no matter what, but keep in mind that at least you will get something out of it instead of nothing.
3) this one is tricky but it might be the only solution and you must have solid evidence to support your action: gather all claims/promises that your partner made, even BEFORE your two went into a deal. it is called something like "pre-contract info exchange" and law states that parties engaging in a relationship must do so in an honest way. So if you can prove that your partner lay to you in order to contract with you, you could fight him on these grounds. This might really scare him off as you could sue him for damages as well. You might even want to prepare this option just to be in a solid position to negotiate point 1 or 2.
Hey guys! Thank you so much for your responses, we have created a legal document with terms of partnership and since I have made this questions things have seriously already picked up. Thank you thank you!
If you have not done this already - take up the time to document a business plan with roles and responsibilities for each partners. The business plan should include some SMART goals for each partner (specific, measurable, achievable, relevant to your business, and timely/time-bound). Your business plan needs to include consequences (what happens when the SMART goals are not met or delivered).
Including SMART goals (milestones on when you both agree that the goals will be met) - you will have a better footing on whether he is making a solid effort. If/when those milestones or deadlines are not met - then you follow-through on your "consequences" --or next steps that you both agreed to upfront.
Taking the time upfront to map this out - saves you a lot of anxiety in the future.
Let me know what you decide to do.
First try to understand what the problem is. Sometime the problem are not people.
But if you are thinking not to continue with your partner. Assume the things with out him. Is it sounds good, then you can go on table and talk to by logical points.
No easy but key is to make sure you have clear deliverables and these are judged by someone other than yourselves (i.e. a non executive member or trusted 3rd party). Be careful not to compare each other based on time spent or busyness as a sales person could spend 30 hours and bring you the biggest deal of your life and you could spend 2 years and only just get the software right.
Find a happy medium, i.e. suggest an incentive program for him to pour his efforts into so that he can be useful in a way you can see and appreciate. Chances are he's powerless without the right tools.
I had my share of that. All the sales my ex business partner closed were a loss for our company. He left customer projects hanging without notification to the customer and left for a vacation abroad. Plus a million other things. So I had a short conversation with him with ALL the available financial figures what I had done and what he had done. According to the law he wasn't filling his duties. After the conversation I had the chance to buy him out for a sum that was satisfactory for both of us - but neither one of us got rich or poor...I suggest anyone who has these kind of problems have a shareholders' agreement well done prior to establishing a company - like we did. It was a huge help. If not, then you just have to be a good, strong negotiator.
I think your partner knows that there is a fundamental flaw in the software or the market for it which is why he's not that keen on selling. He may be the reason the software was developed so he's embarrassed to tell you the truth. Look over the product again and see if it needs any radical changes. Start by copying a competitor halfways, then innovate over it.
I have a free e-book for startups and idea generation: http://www.lulu.com/shop/c-k-yap/1-million-business-ideas/ebook/product-21920607.html