Going into business with friends.

[triple homicide]

Have any of yall ever gone into business with friends, homies, girlfriends, family, etc? What was your experience?

Situation Given:

Homie A has $15k invested in a home studio and knowledgeable of the music field. Homie B...nothing. A wants to move his studio to its own space and open it to the public but wants someone to help with the rent to get started. A & B always talked about opening another studio to make money but A didn't want to spend unnecessary money when he already has a studio. A ask B if he wants to go half on the rent and help promote to bring in clients. B says yes. B knows nothing about studio equipment, recording, mixing, making beats, shooting/editing videos, bookkeeping, etc. A knows all of that.

A & B agree by handshake. Business starts booming. A is doing all of the studio work and bringing clients. B pays half the rent and brings in clients too. B doesn't like that A is pocketing most of the $$$. A starts to feel like he is being cheated after few sessions with clients that B brought in. A suspects some under the table deals going on with B after not being paid what he deserved from some sessions with B's clients. A tells B they should write a business agreement. A suggests a 90/10 split of the $$$ while B suggests a 50/50 split. B gets mad after A declines.B feels he should get half the $$$ because he's paying half the rent and bringing in business. A explains to B that he didn't invest in the equipment and has no assets, does most of the work, pays half the rent, brings in clients and basically manages & runs the business. A also tells B that the business license & lease is in his name. B doesn't like that. A then suggests a 85/15 split but B declines and feels insulted. They get into an argument. B says hes done and leaves A with the other half of the rent and finding clients on his own. Friendship ended.

 

[mojodmonky1]

This aint showfriends...

you dont mix money and family or money and friends.

get everything in writing beforehand so that there are no disputes. sucks for your buddy.

 

[car9vel]

65% & 35% would have been reasonable. It also depends on how much profit was being made on the money put down for rent.

 

[ohboydanny]

You shouldn't have been greedy.

The 15% he offered you was more than plenty for what you put into the business.

 

[ripyzyz]

assuming you A, you coulda came better than 15%.

 

[430AM]

No lie... Reading that gave me a headache.

Anyway the split should be 75/25. Ofcourse A should get more. It's his equipment.Without the equipment, none of this is possible in the first place.

 

[teeoh owens]

If A really wanted to he could just pay all the rent and drop B, B has no leverage. Sounds like the business is doing good. So why wouldn't he just pay the full rent himself.

 

[shatterkneesinc]

I will never do business with friends unless they propose the opportunity to me first..never the other way around

I can trust and rely on myself to do work but dont know if i can trust a friend with money.

did business once and went very bad, the friend wouldnt do any work. this is all part of the game theory and free riders problem

legally ur partner is entitled to half of the profits since there is no contract, doesnt matter how much you contribute, its 50/50

the moral of the story is draft a contract, friends are less likely submit to friends since everyone is in the same level of respect

solution to the problem

45-35 split with you getting a salary on top of that since you do the work

the remaining 20% will be split based on revenue the clients you brought in divided by the total revenues of all the clients

 

[myjaysgetrocked]

Unless it was specified and a profit split based on investment was agreed upon, the articles of partnership say it's a 50/50 split.

 

[kanyewestjayz4life]

Im headed into this situation also.

 

[periwinkle]

Since A is the one actually doing the work for the business, A should be getting more, but how much more depends on how much work B is doing for the business. The thing with this situation is that both do the promoting, if one did the promoting and the other did the work, then having the split closer to 50/50 is reasonable, but since both are promoting and A is doing all the work and did the most investing, then A should be getting a lot of the money, I'd say like 67-80% of profits for A would be sufficient.

It's pretty much B wanting more money, but A has the leverage in that the business can still exist with B gone, pretty much you should have formed a business contract first.

 

[tony montana]

90/10 though?

 

[el cuco]

Partner A


Partner B:

 

[Mark Antony]

Originally Posted by MyJaysGetRocked

Unless it was specified and a profit split based on investment was agreed upon, the articles of partnership say it's a 50/50 split.

Yeah unless specified while creating the partnership, it usually defaults to a even split in the partnership.  A should've took into consideration he's basically bringing everything to the table and figured out the split before any money came in.

 

[blackmagnus514]

I do business with one of my friends from college... We have an operating agreement.

Otherwise, I wouldn't do it. I would rather make friends from business than do business with friends. I had a friend approach me about advertising and promotiing some of my clients on his Internet radio station. His station broadcasts only to Brooklyn and Queens here in NYC. He's also not consistent in airing the show. My clients have been on XXL, MTV, The Source, etc...Yet he gets mad when I told him his show isn't big enough and that they've been on XXl and I want to build on that press for even bigger features. Dude has no knowledge of promotion but he feels like I'm wrong and tells my brother instead of me how he feels. He overlooked the fact that I gave him some constructive criticism as we'll.

Don't do it. Not that I mind how he feels because I could care less and I don't need friends who get mad when I try to school them. Especially that B didn't know anything....he's feeling like he's being hoed

 

[zmoney3]

do not do it. it never works out. NEVER. youll start to hate your friends