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I don't often write about my business or private life, but...

Typical a letter from my bank on a Saturday.

With the reduction of the Euro has meant quotes I gave six months ago are coming to fruition. The fact that we have doubled turnover in the last year is beside the point. Our partnership is ready for the next step, i.e. we are ready to hire at least one more person to fulfill the business on the books.

I used to own 100% of the business but to reward my two employees for their years of service I made them equal partners. The problem is not there, but neither of them have the financial resources to contribute to expansion, so we went to the bank.

They regret, of course they fucking regret that the credit worthiness of my two colleagues is insufficient, wtf, I said, OK, I will act as guarantor, now I have a problem with two people I cherish. Goddammit, it is a risk I am willing to take but now they are insisting I take majority share, I don't want it, they don't want to be beholding, that I can understand.

Fine if I cover 100% of the loan the arseholes at the bank declare, but Jesus H effing Christ  we make a bloody profit I say. Still; they reply. My accountant says that I must cover my ass, Oh sheesh, I say, I run my business on trust and friendship, not in business; I'm informed.

It's going to be one hell of a Monday.

Anyone got any bright ideas? I'm an engineer/researcher not a banker.

Why do I have to piss off everyone?

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Comment Preferences

  •  Tip Jar. It is not even a bloody risk. (22+ / 0-)

    "Another world is not only possible, she is on her way. On a quiet day, I can hear her breathing." Arundhati Roy

    by LaFeminista on Sat May 19, 2012 at 11:39:46 AM PDT

  •  Credit Union? (5+ / 0-)

    Kickstart?

    Ask Mitt if he can help you out--job creator to job creator?

    Good luck.

    "Shared pain is pain lessened; shared joy is joy increased."--Spider Robinson

    by Maggie Pax on Sat May 19, 2012 at 11:45:17 AM PDT

  •  Consider separating the trust & friendship pillar (6+ / 0-)

    ...of your company culture from the accounting and external contracts like credit. You can formalize future earnings in a contract and still be the sole owner. I may be more inclined to keep my emotions out of business decisions so it's easier said than done by you but suggest you not sweat the small stuff you're in control of, like how you organize, and concentrate your emotional energies on your next challenges. Banks have finally learned to be more cautious about lending and overall I think that's a good thing for all of us. The risk for their caution is as real for you and for them. Also I strongly suggest an exit protocol each partner agrees to up front. Every partnership needs a graceful divorce or survivorship  pathway.

    Eliminate the Bush tax cuts Eliminate Afghan and Iraq wars Do these things first before considering any cuts

    by kck on Sat May 19, 2012 at 12:05:35 PM PDT

  •  Take out the loan in your name (3+ / 0-)
    Recommended by:
    LaFeminista, Odysseus, Sark Svemes

    Buy out your employees - but arrange "terms" with them so you buy their shares, slowly. I'd say 20 year terms with a 10 year bubble payment sounds about right.

    That is, they still own the business, except so far as the bank is concerned you're taking sole ownership back again.

    I'm also an engineer, but something like this might work.

    In theory, there is no difference between theory and practice; but in practice, there always is a difference. - Yogi Berra En théorie, il n'y a aucune différence entre théorie et pratique, mais en pratique, il y a toujours une différence. - Yogi Berra

    by blue aardvark on Sat May 19, 2012 at 12:12:25 PM PDT

    •  I gave them equal shares, it was a bonus for all (1+ / 0-)
      Recommended by:
      blue aardvark

      thay have done, and I take that very seriously, you are saying what they are telling me....goddammit

      I know....it's me.

      "Another world is not only possible, she is on her way. On a quiet day, I can hear her breathing." Arundhati Roy

      by LaFeminista on Sat May 19, 2012 at 12:14:56 PM PDT

      [ Parent ]

      •  Sort of (3+ / 0-)
        Recommended by:
        LaFeminista, divineorder, luckylizard

        I'm saying take back ownership, but do it so slowly that it never actually happens :-)

        In theory, there is no difference between theory and practice; but in practice, there always is a difference. - Yogi Berra En théorie, il n'y a aucune différence entre théorie et pratique, mais en pratique, il y a toujours une différence. - Yogi Berra

        by blue aardvark on Sat May 19, 2012 at 12:18:58 PM PDT

        [ Parent ]

  •  Why are you using a partnership at all? (2+ / 0-)
    Recommended by:
    LaFeminista, johnny wurster

    Seriously. While I'm not familiar with French law, look into the requirements for SARL (société à responsabilité limitée, the French equivalent of the German GmbH and the American LLC).

    Assuming that the SARL is similar to the German-circle companies, you can pretty much run it like a partnership without unlimited liability in case things go pear-shaped. Might be worth looking into, if you have the time and inclination to visit an attorney.

    As fot the loans, if the bank demands guarantees, regardless of the form of company, you'll probably be in a take-it-or-leave-it situation. You might try to negotiate, or it might be worth loking at other banks; they don't all demand the same terms.

    Iuris praecepta sunt haec: Honeste vivere, alterum non laedere, suum cuique tribuere. - Ulpian, Digestae 1, 3

    by Dauphin on Sat May 19, 2012 at 12:19:31 PM PDT

    •  because... (1+ / 0-)
      Recommended by:
      Dauphin

      I'm stubborn and getting really pissed off.

      I suppose I am just refusing to obey the conventional wisdom. I have an option to buy back the business, it is not something I want to do.

      "Another world is not only possible, she is on her way. On a quiet day, I can hear her breathing." Arundhati Roy

      by LaFeminista on Sat May 19, 2012 at 12:26:53 PM PDT

      [ Parent ]

      •  In that case, there's little you can do. (2+ / 0-)
        Recommended by:
        LaFeminista, johnny wurster

        You can submit to their terms, try to negotiate, or tell them to sod off.

        Now, if you had a SARL, things would be simpler, because you could do a repo deal, so the others would transfer parts of their shares to you, and you would enter into a mandatory buy-back arrangement when the loan is paid off. They would still be partners, but with smaller shares.

        Of course, that venue would run the risk of one (or all...) of you getting stuck in an arrangement with unfavourable terms...

        Iuris praecepta sunt haec: Honeste vivere, alterum non laedere, suum cuique tribuere. - Ulpian, Digestae 1, 3

        by Dauphin on Sat May 19, 2012 at 12:34:20 PM PDT

        [ Parent ]

  •  Have you looked into forming a co-op? (1+ / 0-)
    Recommended by:
    LaFeminista

    It would put you all on equal footing in regards to status in the business.  A partnership is already kind of a coop.  It would mean letting new employees into the co-op but in the long term it might be worth it.

    There revolution will not be televised. But it will be blogged, a lot. Probably more so than is necessary.

    by AoT on Sat May 19, 2012 at 12:31:28 PM PDT

    •  That is why they are looking at their credit as (1+ / 0-)
      Recommended by:
      bumbi

      well, they were employees but two years ago I changed the structure to a joint venture.

      I'm not keen [nothing to do with money] on going back to being an "owner".

      "Another world is not only possible, she is on her way. On a quiet day, I can hear her breathing." Arundhati Roy

      by LaFeminista on Sat May 19, 2012 at 12:37:02 PM PDT

      [ Parent ]

  •  sounds like you want the bank to finance (0+ / 0-)

    your soon-to-be-partners' acquisition of your partnership interest?  If so, why not just cut the bank out of it?  You can self-finance or substitute equity for compensation for X years until the desired amount of ownership is transferred.

  •  I would recommend an S-Copr structure, or an LLC (1+ / 0-)
    Recommended by:
    LaFeminista

    ...Something that prevents you being liable for a 'partners' total liability in the event there are issues.

    Friendship can go out the window, so this kind of restructure would allow you to redefine your business and how it operates while providing a reward in shares/percentage income to those who are major shareholders, and still maintain friendships somewhat separated from business activities which involve each of you.

    -6.38, -6.21: Lamented and assured to the lights and towns below, Faster than the speed of sound, Faster than we thought we'd go, Beneath the sound of hope...

    by Vayle on Sat May 19, 2012 at 03:53:39 PM PDT

  •  This devolving of ownership as compensation (1+ / 0-)
    Recommended by:
    LaFeminista

    for commitment and performance is something that I work with in my organization as well.

    One idea that comes to mind would be to agree that a portion of their compensation, rather than organizational funds would go towards the pay-off - a kind of informal buy-in to the loan?  Some way that compensates you for the risk that you are taking so that the others do not feel completely carried by you?

    I have also had to come to terms with the fact that in the organization that I am running, people often want to bail on
    their ownership level responsibility and accountability anytime there is a sign of shakiness on the horizon.  In other words, they are owners participating in the company when all is good and secure.  However, when things "get scary", they want out of that responsibility.  

    I have struggled with this for many years now.  I was particularly eager to pattern the organization's strategic plan to move towards "samoupravljanje" or self-management.  However, I have grown to understand that not everyone wants this from a career.  

    I have no idea how long you have been at this, but it has taken me 12 years to get everyone situated into a role that is comfortable for each individual member of the team.

    It gets on my nerves, and you know how I am about my nerves...

    by ciganka on Sun May 20, 2012 at 01:49:46 AM PDT

    •  Thank you (0+ / 0-)

      I have been at this 6 years, and that looks like a viable plan

      "Another world is not only possible, she is on her way. On a quiet day, I can hear her breathing." Arundhati Roy

      by LaFeminista on Sun May 20, 2012 at 04:07:06 AM PDT

      [ Parent ]

      •  I realize that you keep the personal business out, (0+ / 0-)

        but I gotta say that I really admire how you manage your organizational responsibilities and still find time to share with the community here with your diary posts.  

        It gets on my nerves, and you know how I am about my nerves...

        by ciganka on Sun May 20, 2012 at 04:34:56 AM PDT

        [ Parent ]

        •  I think they call it (0+ / 0-)

          the seven day week, the office is across the courtyard from the main house [old farm], my diaries are a time out

          "Another world is not only possible, she is on her way. On a quiet day, I can hear her breathing." Arundhati Roy

          by LaFeminista on Sun May 20, 2012 at 08:13:09 AM PDT

          [ Parent ]

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