Is Your Business Partner Pulling Their Weight? A Back-to-School Lesson for Business Owners
It’s back-to-school time! Many of us remember the days of group projects where you did all the work and carried the other people in your group – especially the science project! Or where this happened to your child. Now you own a business and life seems to be repeating itself with your business partner. You put in longer hours. You are working weekends. You are working yourself to death – yet your business partner always finds the time to do the things he enjoys. And despite all this, you make the same amount. Is this fair? What to do?
Sometimes there is nothing to do, or nothing that can be done. As is so often the case, communication is key. If you resent the arrangement, sometimes just airing out the issues will work to resolve them. But the discussion itself could make matters worse. “Rocking the boat” could be destructive. You could make 100 rational points, but all your (defensive) business partner hears is you calling him “lazy.” The response is often, “no one told you to work yourself into the ground with those long hours. That’s your choice.”
And he may be right. It might actually be your choice because you just have different approaches to work and different work ethics. Or, you might feel you are the only one who appreciates what you do for the company or even realizes how critical it is. After all – if he knows how critical the things are that you are doing, why isn’t he helping more? It is not too long before one starts to think you are being taken advantage of.
If the issue is not addressed – and it is already bad enough that you are reading this article about it – it is not difficult to see resentment setting in. And resentment between business partners can be a cancerous sore. Once it metastasizes, an expensive and invasive “treatment” – litigation – may be the only solution.
It is important for business partners to keep in mind that there is a difference between monies paid for work and profit distributions. Profit distributions, of course, must be in accordance with share percentage. But if one of you is working much harder than the other, there is no rule that says the effort cannot be reflected in compensation. Sometimes, of course, the issue isn’t even the money but simply the effort and what the lack of effort means. If your business partner does not understand these things, it may portend larger issues in the relationship.
You have to determine what you can, should, or even must endure for the sake of the company. But you also need to decide what you can no longer endure. Talking these issues out with someone who understands the nature of these types of cases is critical. You need to do what is best for the company, but also what’s best for you. And you need to understand when those things overlap – and when they no longer do. I deal with these issues every day, it’s a main part of my practice. Please do not hesitate to reach out to me at dcroberts@norris-law.com.
About the Author – Business Divorce in NJ
David C. Roberts, Chair of the firm, concentrates on complex commercial litigation, including fraud, trade secrets, and restrictive covenants, with a focus on business partnership and shareholder disputes in New Jersey. Known as business divorce litigation, these disputes often involve shareholder and LLC member oppression, embezzlement, owner freeze-outs, dissenter’s rights, and efforts to dissociate or expel an owner. Dave strives to resolve matters through mediation but is a seasoned trial attorney when needed. He frequently writes and lectures on minority shareholder disputes. With extensive experience representing both minority shareholders seeking buyouts and majority owners defending against such claims, Dave offers unique insight into the strategies and challenges of business disputes, particularly in family-owned companies.