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Under-performing Business Partner

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BubbaJ

BubbaJ

Structural
Mar 18, 2005
163
I am currently in business with two partners. It was an understanding at the start-up that we would market our own skills, in addition to marketing the company as a whole. We have mostly complimentary skills, although actually rarely work together on a project. Partner #3 has a skill set that overlaps Partner #2's. A substantial portion of the work P#3 has done was due to marketing by P#2. Work P#2 was more than capable of doing, but gave to P#3 because of lack of other chargable time. P#3 has done very little marketing and has the billable hours (or lack thereof) to show for it. P#3 also frequently fails to act on leads or follow up.
We have previously discussed this matter at a business meeting. More details of said meeting can be discussed later.
The idea of the partnership was that when one person had a "slow spell" then the business would "stay afloat" via the other two. But, my question is, how long do you allow a "slow spell" to continue? Myself and P#2 are getting tired of carrying P#3. Has anyone dealt with this issue before?
 
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You might want to step back and reconsider your collective strengths and weaknesses. Maybe marketing just isn't Work P3's forte, but he is very capable of performing the work, i.e. repeat business. I don't know, just making an observation.

I would suggest that you sit down again and discuss candidly what each strengths and weknesses are, what your comfort zone is and come up with some agreed upon metrics of monitoring performance and document it. Maybe set up a quarterly internal performance review.

If it turns out that Work P3 just isn't shouldering his share of the load, maybe you want to buy him out or use whatever your by-laws allow for removal.

Greg Lamberson
Consultant - Upstream Energy
Website:
 
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An alternative is to look at how the billing is broken up. If there is value to the marketing and value to the "work", then P2 should be getting some compensation for bringing in the work, as well as doing the work that P2 actually performs. If you are all getting the same rate for work now, then recalculate it based on 80% rate for doing work and 20% for selling work. Might get P3 out there selling, or might get P3 ticked off, or might actually be the long term and equitable solution.

You might need to be sure that this does not violate local engineering laws as regards fee splitting, but given that it is all internal to the company, I suspect it will not.

Jack

Jack M. Kleinfeld, P.E. Kleinfeld Technical Services, Inc.
Infrared Thermography, Finite Element Analysis, Process Engineering
 
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I wonder how you got into a partnership with someone that does not perform well. You'd think you knew this guy's capabilities, but apparently not.

Sometimes, some peoples are just plain incompetent at certain things or just plain incompetent period (you say he does not follow on leads, a real sin). I'd look into ways of changing company name and bail out of the partnership altogether because right now, as you describe, all you have is an employee with lots of perks.

Good luck to you.
 
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I wonder how you got into a partnership with someone that does not perform well. You'd think you knew this guy's capabilities, but apparently not.

Atlas, that sounds pretty snarky. This kind of thing happens all the time, especially in that partnership called marriage. People lie, give false impressions, become complacent, give up, etc. It's doubtful this partner was always that way.
 
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Or sometimes we think we know them, or we only know a part of them, or their priorities change, or we change. HAve to have a good partnership agreement so you can fairly split up if need be.

Don Phillips
 
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Greg makes a great point. If this isn't that P3 is a lazy business partners and is simply that he needs help marketing his services, P1 and P2 might consider helping him to market or sell his services.

Otherwise, why not consider creating some sort of profit distribution system whereas the amount of profits paid out are equal to the amount of work put in, and maybe put in some system to account for slow spells, but make sure that in the long run all three business partners are getting compensated equal to the amount of work that they are putting in.

Mike
 
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Maybe the guy is not motivated.

There may be several reasons. Have you taken a direction he disagrees with? Have you and the other partner overruled him on a matter of business or a technical issue? Is he a passive agressive type? What about cultural issues, some people are not as aggressive individualists as we Americans are, but are more likely to work within teams and value consensus versus individuality.

Meet with him and discuss your observations, get to the heart of the matter and offer understanding and see if he responds. If not, then adios. Ensure the parting is amiable, and get going with the future. The good thing about engineering is that there is a shortage, and we can operate from the perspective that there is plenty of work to go around.





 
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BubbaJ,

Equal partners should do equal work to earn their equal share. If they dont do equal work (on average) then they do not deserve an equal share.

Sounds harsh, but thats business.

Dont let them drag you down with them.

csd
 
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All the above is true, but any agreement should be put in writing,by, Oh *** forbid, a LAWYER, but one very well versed in Partnerships and Corporations. I have not seen it mentioned that one was originally utilized. Had this been done, and the actions or inaction of Partner 3 documented in writing, you might mave more options now.

Maybe it is time to Incorporate, change, restructure ??? ...

Before it is too late.

Mike McCann
McCann Engineering
 
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