eCommerce Tycoon

**CnaHost** · 12-05-2008, 02:12 AM

Well I run a web hosting buisness with a "Partner" he has basically done nothing except make a skin for the website and buy a couple ads spots. But now he started to take money out of my paypal account that I accept the companies payments from and he said "I will send it back tomorrow". Its been two weeks since he said he will send it back. And now whenever I try to talk to him on msn messenger he just doesn't respond or goes to busy mode. Also I never said he would own 50% of the company just get 50% of the profit. Now there hasn't been any profits yet. From his assumptions this company is worth 1200 usd when its only been around for about 4 months now and wants me to pay him $500 because he thinks he owns half the company. I haven't told him that he doesn't and I haven't told him he does because he just logged off after he said that. What do you guys/gals think I should do in this situation? He is also in the hole from this company but not nearly as much as I am, he has put about 10% of the money that I have put in.

**usearchme** · 12-05-2008, 07:14 AM

lol change the paypal password for starters !

Woc

**CnaHost** · 12-05-2008, 06:09 PM

Quote:

Originally Posted by usearchme

lol change the paypal password for starters !

Woc

Please don't insult me. Just because im 17 doesn't mean im a moron.

**seolman** · 12-05-2008, 07:46 PM

I'm sorry you are having this problem and experience is always the best teacher, but also one of the toughest. Unfortunately there's probably not much you can do about the money that is already gone but what you can do is learn from what's already happened. Here are a few very basic ideas:

The first thing that has to be done in any business arrangement is to put everything in writing. Both parties have to agree exactly what they will put into the business and exactly what they expect to get out of it.
How will expenses be handled?
If the business fails how will assets be divided?
Who will manage the accounting, taxes, payroll?
Will the business be a partnership, corporation, limited liability company? This kind of decision is usually made after talking to a tax specialist.
Who will do the sales?
Who will produce the product or provide the service?
What kind of guarantee will you offer the customer?
Will you need insurance? If so what kind (product liability, health, workers comp)?
Will you need an office or work from home?
What about brochures, business cards, stationary?

There are a lot more issues to consider but if you haven't sat down and reviewed even these basics and you are already having problems I would suggest the first thing you need to do is quickly protect yourself. From your brief description it seems you are the one who is making the money for the business so I suggest you are the real value and you should protect your money until all these issues can be resolved.

Is there anyone in your family who has business experience who you can confide in? Maybe you can have a coffee with them and ask a bit fo advice about the best way to set up a business in the early satges so you keep costs down. There are also quite a few good forums around to help the small business person. One I might suggest would be the Small Business Forum.

Hope this helps.

**colbyt** · 12-05-2008, 10:35 PM

If you average the two responses before this one you have received an above average response.

The first response is your key to solving the rest of the problems. The second is your key to preventing them from happening again.

I do wish you well.

**Feydakin** · 12-09-2008, 09:55 AM

Seolman hit it exactly.. I'm amazed at how many handshake deals are done these days.. It is incredibly rare that deals like this work out..

Contracts, contracts, contracts..

If it were me, I'd tell him to keep the money he took and that you have bought him out and expect to never here from him again. Write the whole thing off as a learning experience as to what happens when you have partners and move on without him..

**TripleMoons** · 12-09-2008, 10:09 AM

Something to keep in mind...In the US, minors can not be bound to any contract. I'm not sure how it works in other countries, but a minors signature legally means nothing, so at this point a contract is a moot point. If it went to court, the contract would be thrown out.

Other then that, I think you've received some very valid advice!

**Learning Newbie** · 12-10-2008, 07:51 PM

Quote:

Originally Posted by Feydakin

If it were me, I'd tell him to keep the money he took and that you have bought him out and expect to never here from him again. Write the whole thing off as a learning experience as to what happens when you have partners and move on without him..

I think it was George Carlin who said "I lent a friend $20, and never saw him again. That was worth $20". Feydakin is right, you're going to have a very hard time recovering that money, from the sound of things. It seems to be what you've paid to learn this person (and maybe this situation) isn't trustworthy.

I don't agree that handshake deals are almost always destined to fail, but they absolutely demand a lot more diligence than most deals. And a contract really ought to be the first mandatory thing in almost any business deal, unless you have very good reasons not to use one, particular to that circumstance. (IE a lawyer is expensive doesn't count.) Although TripleMoons is right, that US law doesn't recognize minors entering into contractual agreements.

**CnaHost** · 12-10-2008, 08:44 PM

Quote:

Originally Posted by Learning Newbie

I think it was George Carlin who said "I lent a friend $20, and never saw him again. That was worth $20". Feydakin is right, you're going to have a very hard time recovering that money, from the sound of things. It seems to be what you've paid to learn this person (and maybe this situation) isn't trustworthy.

I don't agree that handshake deals are almost always destined to fail, but they absolutely demand a lot more diligence than most deals. And a contract really ought to be the first mandatory thing in almost any business deal, unless you have very good reasons not to use one, particular to that circumstance. (IE a lawyer is expensive doesn't count.) Although TripleMoons is right, that US law doesn't recognize minors entering into contractual agreements.

Thanks for the info. And me and my partner are both minor's. But im not sure what is is in the UK.

**Feydakin** · 12-10-2008, 11:10 PM

I think your best course of action is to do like I said.. Tell him that was his buyout and you are keeping everything.. If he throws a fit tell him that he needs to return the money..

What I'm really curious though is if your customers know that they are working with minors?? They could be left in a serious bind if you failed in some significant way and they decided to sue.. Or if your provider had an issue with you, or you with them.. I would think that since you are a minor, that your provider could shut you down with no notice for that reason alone since you couldn't legally sign the contract you have with them..

You may have more legal and business issues that just your partner..

**seolman** · 12-11-2008, 03:01 AM

Usually decisions made in the heat of anger aren't the best. I suggest you make an honest assessment of how much cash each person has put into the business. Trying to add up how much time each has put in may be wasted time. New businesses always have what we call "sweat equity" - each owner putting in time to help build it and getting some ownership for their effort. The value of that time can be argued till the end of time so it may be best to leave that aside for now.

How much real cash and other assets (i.e. computers, software) did each person put in? A fair assessment would have to be done and the assets divided according to what each has contributed. If one person has contributed more than the other and money is owed but one partner can't afford to pay the other immediately, the other should be willing to wait a while. You can't get blood from a rock.

If no verbal or written agreement was made, there is still such a thing as fairness and personal reputation to consider. But if one party simply refuses to be reasonable, all bets are off until both parties are able to sit at the table and discuss the matter rationally.

The above reasons illustrate clearly why written agreements are always better. Handshakes are nice but being human, we have a tendency to either forget, or have our own understanding of what was said. Writing things down and signing a piece of paper at least forces us to think things through in a bit more detail before we start spending money.

Every business man worth his salt has been through what you are going through right now (at one level or another) whether he wants to admit it or not so keep working on the problem. It will get resolved and you'll be much wiser when it's over with.