Dealing with a business dilemma

[hepcat]

This is going to be a bit long and I'm going to be intentionally vague about the nature of the business, but here is the situation.

I've got a friend who started a business a year ago. It's a great idea, something I have a lot of knowledge and experience in, and the best thing is the business requires almost zero overhead costs until things really start to take off. So naturally his business is extremely profitable in his first year and shows no signs of slowing down. He formed this business with his girlfriend, who is about 23 or 24 and has no experience in the industry the business is in. She's listed on the website as a co-founder so I am assuming she has a 50% stake in the business. Frankly I think she's just a piece of ass for him.

About six months ago he approached me to work for him, but said the workload was too light at the time and that he'd reach out to me when he needed help. A couple weeks ago he invited me to dinner to talk about the business and getting me involved, saying his phone was ringing off the hook and he needed to bring someone else in to help him. He told me he'd work up a contract with his attorney and send it over for me to review. We discussed a share of ownership the business and a potential partnership, but he was against that. We worked out a percentage as a contractor in the end, which I wasn't very happy with. Going back to the girlfriend, I'm still wondering why he needs my help if she is involved in this. It seems like she does nothing for the business, but I don't really know.

I've followed up with him several times over the past few weeks and he has yet to give me a contract to review. His main reason is this past week he was in his girlfriend's home town because her mom had a heart attack and she needed to be with her. Very sad and I can see how this would put you behind on moving things forward. But, I'm not sure how that slows down me getting a contract from his attorney and if he completely stopped doing any work for his business while he was there.

Some personal things about this guy - he has great industry connections and comes across as very professional. I'm not surprised his business is successful so far. Personally, I'm not sure how much I can trust him though. He is the kind of guy that will say something to your face, then turn around and so something completely different. I've worked with him in other capacities before, and when it comes to being transparent about money, he seems pretty honest about that. But as far as personal things, like the level of involvement of his girlfriend in the business, he has been a bit shady. So trust is a factor here.

The other side of this coin is, I've been thinking about just taking his idea and making my own business out of it, and expanding on it. Frankly I have a better set of skills for this business than he does. The thing I lack that he has is the connections to the industry. I mentioned this idea to a close friend of mine I went to college with who I've talked about starting a business with before, and he loves the idea. He has a background in sales and could be a big asset in growing a new business. But, he also lacks the connections into this industry. The best thing he brings is sales moxie and the ability to make great presentations. I could do all the work behind the scenes and have him out there bringing me business, so I'm not against that.

Basically I'm debating whether to just take this idea and expand on it and compete with my friend's business, or wait around and see what he offers me. I do worry about some kind of legal ramification if I started a competing business, but I haven't signed anything with him and the work isn't anything you can really copyright or protect. It's a service, not a product. I kind of had my heart set on being his partner and getting a share of the business but it seems like that's not an option. He has been dragging his feet getting me involved in his business so I'm at the point where I feel like I need to give him an ultimatum, to either make me an offer and give me some work to do, or I'm going to do something else.

Just a rant and if anyone wants to offer any feedback I'd appreciate it.

[nosuchthingasapanther]

nothing about what you've posted says you should go into business with this person, especially when he balked at the idea of you being a partner.

it sounds like he plans to do to you what you're debating doing to him....utilize your (his) strengths until you're (he's) no longer needed.

[dave-o]

Start your own business and tap his girlfriend....

[toldozer]

It's his business,  he doesn't owe you a partnership. If you think he adds that much value then hear him out on compensation, if not do your own thing I guess. 

[PanthaSan]

All that just to be a coke dealer?

[motocross_cat]

Sounds like your talking yourself out of it.  Go with your gut and pass IMO.

[t96]

Hard to really say for sure without knowing more details about what the industry is, among other things, however I would say go with starting your own business over working with this guy.

[Anybodyhome]

So, sounds like your friend is the 2-person company who got the giant contract to rebuild Puerto Rico's power grid. 

(just kidding)

As Mark Cuban always says on "Shark Tank,"

"What do you do better than they guy already doing it?"  

[CRA]

sounds like you actually know partnering up with him just isn't a great idea based on your post. 

[Zaximus]

I mean, it's his business so I don't see why he has to offer you a partnership, but then again, I don't know how much you are worth to the business either.

If you're hard up for money and are interested, wait for his offer.    I wouldn't sign a non-compete (even if those are kind of hard to enforce etc) though.     Maybe use that as leverage to get a partnership or a good percentage.  

Connections are pretty huge big though, especially when it comes to sales.    It could take you a lot longer to get things going than him because of that.  

[thefuzz]

"Brian",

 

I've been approached about a few opportunities, but really was hoping that you and I could work something out.  I know that you have had some personal issues to deal with, but I need to know where we stand.  If you could give me a quick breakdown of exactly what your attorney is in the process of drawing up, it would help me greatly.

 

Thanks,

Hep

[hepcat]

1 minute ago, thefuzz said:

"Brian",

 

I've been approached about a few opportunities, but really was hoping that you and I could work something out.  I know that you have had some personal issues to deal with, but I need to know where we stand.  If you could give me a quick breakdown of exactly what your attorney is in the process of drawing up, it would help me greatly.

 

Thanks,

Hep

I actually sent him a similar message yesterday, and he hasn't responded yet. I know he's back in town. Not sure what is going on with him.

At this point I'm leaning to just start my own business and get going. His website, branding and the involvement with the GF are just too many red flags. I stand to make more as a competitor than as an employee of his. But, I'm still going to wait to see if he offers me anything, and respond by saying he can hire my company to do the same work for him.

[stirs]

So define "friend"

If he is a close friend, then working together has benefits and pitfalls (especially if he is just about the dollars), but hanging you out for a long time seems to suggest that you use the word "friend" rather loosely.

I would be afraid to go into business with him, first, because you'd probably need to "buy in".  Why else would he just give you part of HIS business.  From what you have said, I would probably not buy in or even work for this guy, unless of course you have no other job and need quick cash and have nothing to lose.

Starting your own business means that the friendship will end, but if he has not patents or legal standing, then you are free to do whatever you want, especially if it takes little overhead as you say.  Going into business WITH someone is always tricky so make sure you have controlling interest if possible

[hepcat]

16 hours ago, stirs said:

So define "friend"

If he is a close friend, then working together has benefits and pitfalls (especially if he is just about the dollars), but hanging you out for a long time seems to suggest that you use the word "friend" rather loosely.

I would be afraid to go into business with him, first, because you'd probably need to "buy in".  Why else would he just give you part of HIS business.  From what you have said, I would probably not buy in or even work for this guy, unless of course you have no other job and need quick cash and have nothing to lose.

Starting your own business means that the friendship will end, but if he has not patents or legal standing, then you are free to do whatever you want, especially if it takes little overhead as you say.  Going into business WITH someone is always tricky so make sure you have controlling interest if possible

I say friend, in that he is a former colleague that I have kept in touch with over the years. We used to work together in another capacity. 

I'm not sure if it means my "friendship" will end so to say, but we won't be working together in the same capacity, if he ever had any real interest in working with me in the first place.