Business Partnership Advisor
Together, we can fix your business and partnership problems
Chris Reich, Business Luminary
Can You Prove Your Ownership in the Business?
Why are so many people calling me with heartbreaking stories about being cut out of their interest in a business?
Can You Prove Your Ownership Percentage?
It’s a real heartbreaker to get a call from someone who says they are a partner in business but the other partner refuses to acknowledge it. How is that even possible? And is there anything that can be done? It happens too often and there are things you can do if this applies to you.
No Partnership Agreement? Get One Before the Trouble Starts!
I refuse to lecture people who have made a mistake. Still, I want to scream when I’m told about handing over $100,000 in cash without so much as a receipt in return. Yes, this happens. I had 4 calls like that this week! The amounts ranged from $30,000 to $600,000. That’s one week.
It often involves an immigrant. Many people come to the U.S. from countries with crooked governments and bad banking systems. These folks fear institutionalizing their money. Put $50,000 in a bank and they might never see it again. Clerical error? Do you plan on leaving the country and taking this money with you? We must research how you obtained this money!
Upon arrival in the states, that mistrust of institutions persists but there is an unfounded trust in people.
I spoke with a woman who saved all of her life and accumulated $70,000 in cash. She came to this country and got a job in a restaurant. When she told the owner about her money and asked about a safe place to put it, he offered to make her a partner in a new restaurant. She handed over the cash and he fixed up the restaurant. Business is good. Now it’s 2 years later and she asks about her percent of the profit. “What? I don’t owe you anything!” What can she do? There is no record of her handing over the cash. No receipt, no bank withdrawal records, no check cashed. Nothing.
You might be thinking that this is very unusual. Not so. The other 3 calls this week were very similar. Immigrant, cash, rip-off.
There are other situations that come to my desk that are more ambiguous. A lot of calls have to do with helping someone start a business thinking they would be a partner only to be discarded a year later by the founder. “He couldn’t have started that business without me! Now he says I’m not a partner.”
So here’s my first piece of advice. If you plan to, or already have, put money in a business, document the amounts and what is obtained in exchange. Is it a loan? Will you get interest? Do you get a percentage of the business? How much? Do you have any liability? Sounds like Partnership Agreement, doesn’t it!?
Even if you’ve already stepped into the trap, it’s not too late to demand an agreement be drafted. The longer you wait, the harder your case will be to prove and the less leverage you will have.
If you put anything into a business, get the proper documentation or you could lose it!
Chris Reich wants to protect your interest!
What If They Refuse to Create or Sign an Agreement?
If you haven’t handed over your money yet, keep it! Do not give a cent unless the other party will draft a proper receipt that clearly states the terms you expect. You must avoid the temptation no matter how much you are promised and no matter how great they tell you the opportunity is.
If you have already given your money and now they refuse to count you as a partner, do not waste a minute to act. Call someone who will help you. You may need a lawyer. You might need law enforcement. You might need a mediator like me who can help you find the help you need. Just don’t wait to act. It doesn’t take a very good magician to make money disappear.
If you want to do something that might help you later, send an email or text to your “partner” asking about your profit distribution. That might give you something in writing to use later.
It Doesn’t Look Good for You
When you hand over cash in exchange for what you think is a stake in a business, you had better get something in writing or the chances of ever getting your money back are pretty slim.
Chris Reich, TeachU
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“If you know of someone in this situation, please advise them to act quickly. Time is their enemy. The first thing they’ll have to explain is, “why did you wait so long to do anything about this?” “
If you are in a business partnership, call your bank and find out if you have a joint account. If you are “on” the account but it’s not a joint account, change it.
Many people who call me find themselves in the frustrating position of not having any “power” in their failing partnership. There are two options.
Never prepare for negotiations by thinking about what you want first. Start by thinking about all the possible things that would constitute a payoff to your partner.
I get a lot of calls about thieving partners. People are often disappointed when they hear the answer. If your partner takes $20 out of the bank account using the company’s ATM card and uses that money for lunch, it’s not stealing.