Perspective please

[GoodIntentions101]

Hello, I was advised to post here to find some perspective and hopefully advice...
My business is 3 years old. I now own only 20% following investment by my business partner to fund expansion. I have worked in the business for no salary from it's inception on the understanding that once we broke even in our expanded premises I would then take a salary. This agreement is no longer tenable as I cannot afford to survive due to a change in personal circumstances.
My BP has no compassion for my personal situation. He manipulates the company finances to flatter his other businesses (all interlinked through supplier agreements) and make the break even point ever more unattainable.
As I have only 20% shareholding now I don't feel I have any strength to challenge this and live in fear of being fired from my role as MD.
I am advised that working for nothing in a limited company is illegal regardless of shareholding/directorship. Can anyone advise if this is true?
I have invested vast amounts of time and energy into this business and do not want to let it go but my friends and family are adamant this is a waste of time and I am being exploited by an unscrupulous business partner. Please help.

 

[Mr D]

Directors can get away with quite a bit on personal pay. You don't have to take a wage for example as a director, though if an employee but not a director then the business would have to pay a wage.

Could you resign directorship, end any guarantees you may have made, and work elsewhere for a wage as normal? Retaining your 20% shareholding or selling at a price you want.

 

[GoodIntentions101]

Hi MrD, thanks for taking the time to reply.
Yes I could do that. I don't really want to have to because I have basically built the business from scratch. My BP has invested financially but it is my baby.
It would really hurt to walk away.

 

[Mr D]

Or maybe even not walk away, just stop working there and work elsewhere?

 

[MOIC]

Can the business operate without you?

Is your 20% ownership dependent on you working for free in the company?

Presumably, if you was to leave (or stop working as Mr D has suggested above) your business partner would need to employ someone to fill your working role and pay them a living wage.

Get some legal advice first to protect your 20% ownership, as well as discussing legal options, then arrange a meeting with your business partner.

Good luck.

 

[The Byre]

I have invested vast amounts of time and energy into this business and do not want to let it go but my friends and family are adamant this is a waste of time and I am being exploited by an unscrupulous business partner. Please help.

I am in a similar situation, except that I am the other guy! (And I am certainly not exploiting anyone!)

But I want you to see it from your partner's POV. You may have come up with the concept, indeed, you may have put loads of work into the business. But he has put all the money in.

My business partner is very young and she earns well, but the money that got that business off the ground had to be earned by me over many years. Those were long and hard years, hardships that my BP has not had to endure.

So far, so good. Where I and your BP part ways is in the matter of payment. My BP may be young and inexperienced, but she is 'money-on-the-hoof' and therefore must be paid and paid well. Whether someone is financially involved with the company, or receives a monthly cheque, good people are unbelievably hard to find. Numpties are ten-for-a-penny - or as Billy Connolly said "Never take an idiot with you, you can always find one when you get there!"

My 30 cents worth would be to tell the guy that you cannot afford to live on air, so you are resigning as director, but intend to maintain that 20% share of the business and demand an immediate audit.

In this, you obviously need some guidance and I suggest that you contact @The Resolver (Graham Ross) at https://themediationroom.leadpages.co/boardroom-resolve-home/

 

[GTL]

I second @The Byre

One remark I have, is s there the possibility for a plan B with you? IE if you do walk away, now that you have , I presume, all the contacts and so on, could you start it again, so to speak?

I was thorough shafted 10 years back by someone in a not dissimilar situation and it took years to recover. To that end, I think you need to adopt a ruthless streak in the way you consider defending yourself in the situation if you are to come out of it intact. At the very least ensuring that you retain/keep/store your contacts and any other information (eg emails) which may be useful to you. It is easy to copy. That said, if you have a laptop, I suggest it is 'lost or stolen' if you see what I mean.

Don't rush into any agreement/compromise with the venomous snake, and be wary of the locks being changed overnight. Do not sign for any letters being sent to you, (eg registered/recorded post) - refuse to accept them. I've been there. It isn't nice and your future - not his - is at stake.

If you control the bank account, you need to reclaim any expenses owed to you as a matter of urgency, too.

Best of luck.