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Thread: Starting a new business with a partner and I'm a little spooked

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    Default Starting a new business with a partner and I'm a little spooked

    I am starting a business with another person. The entire thing is my idea from soup to nuts. My partner has made very few contributions in terms of the concept or how to execute the whole thing, but I need her because she has a very highly specialized skill, so I'm willing to split it all 50/50 with her.

    I briefly told her my idea and she was really excited - then we met for dinner to discuss it at length and she's totally on board. But I got a little spooked because she started talking about how her brother can help with this and her sister can help with that, and she already owns a business and can make this a subsidiary under her business, and she might already have some funding, etc. I *think* that she's just overly excited, but as our conversation progressed it dawned on me that I basically just gave this woman the keys to the castle and I have no protection at all.

    So I feel like I need to ACT FAST and protect my idea. I plan on getting a non-disclosure agreement and a partnership agreement for starters. Should I also form a business now, and if so, what kind (LLC, LLP, S-Corp)? I tried looking up the differences between these company types but I really don't understand them well or how to tell what applies best to me/us. Is there anything else I can do to protect my idea?

    Thanks for your help.

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    The business cannot be 50/50 - it must be 51/49 so that you have the majority rule and the final say. I recommend working with an accountant to figure out forming the business and a business lawyer for forming the Operating Agreement of the business.

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    I agree with Bobjob. You need to have a business lawyer and if you decide to become partners everything has to be written so that there are no problems in the future. you also have to let her know that you are the main partner and dont let her use her funds and her business in this business if she doesnt like it better to know now than later when is too late.

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    I actually have this bad dream at night. That I bring in a business partner to help get my idea off the ground and we end up arguing non stop because they proceed to systematically dismantle my plans and vision little by little in place of their own and detrimental cost cutting that undercuts our ability to compete. Not only am I miserable but lose all of my money because the business fails.

    Sounds like it's just an idea at this stage and that you aren't open for business. You're going to have to lay down the law of how it's going to be and that you are controlling partner. That this isn't her company alone, it will not be a subsidiary of her other company, that this isn't a family affair, that this has nothing to do with her other businesses what so ever, and so on.

    You also need to back that up with clear paperwork spelling out the partnership.

    If she doesn't agree or comprehend that, you have to take her out of the picture. If not she's going to run all over you, you'll be miserable, and the business will never develop the way you envisioned it...you'll basically be working for her.

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    Thank you so much for your replies.

    The main concern I have right now is actually that she is going to completely steal my business idea. I STUPIDLY went over my plan with her because I was trying to sell it to her and make her feel confident about the plan. She was SUPER excited, but then started talking about how her brother and sister also have these skills (turns out they are both in the same field as me, which I did NOT know). So in theory they could all swoop in and render me completely useless, and take it all for themselves.

    I texted and left a message yesterday and told her I had a non-disclosure to sign (I know it's a little late for that) and said I wanted to go over the terms of the partnership. She ignored my 2 messages. I am in an absolute hysterical panic now except I have no clue how to protect myself at this stage, IF there is even anything I can do!!!

    On the bright side, I could just be making something out of nothing and maybe she has no intention at all of screwing me. Maybe my imagination is getting away from me. Let's hope.
    Thanks for your help guys.

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    Quote Originally Posted by milesquaredesign View Post
    Thank you so much for your replies.

    The main concern I have right now is actually that she is going to completely steal my business idea. I STUPIDLY went over my plan with her because I was trying to sell it to her and make her feel confident about the plan. She was SUPER excited, but then started talking about how her brother and sister also have these skills (turns out they are both in the same field as me, which I did NOT know). So in theory they could all swoop in and render me completely useless, and take it all for themselves.
    I know EXACTLY how you feel. "Experts" say that you shouldn't be paranoid. That you should discuss your idea with others to get feedback. That the odds of someone stealing your idea are slim. In this instance I totally disagree with the "experts". I'm working on a few things myself and I don't plan on discussing it with anyone until it's almost built, trademarked, and soon to market. I don't want partners, I don't want investors.I want to get it to market myself, and then if it has any success and I have everything protected, I'll talk to whoever is interested in listening. I will need partners to grow it, but not to build it.

    That doesn't mean I work in a bubble. You can't do that. I reach out to people to get feedback on things like some of the tech, without divulging that I'm working on a project. You can talk about things without giving it away.

    If you're a little paranoid, I'm the wrong person to listen to because I'm totally paranoid. And that stems from me not having money to dump into it, I have to finance as I go along. Someone with the skills, infrastructure and money could beat me to the punch easily.

    However, no matter what I do or discuss with people, I never tell them everything. I'll give a few details that wouldn't kill me if someone else did it, but I never divulge the home run part of the idea, nor the execution plan for it.

    Also, ideas really area dime a dozen. Anyone could do it at any time while you're in development. That doesn't mean it will work for them. Execution is everything. Sometimes someone else can soften the market, show that an idea is viable, and even make mistakes that help you perfect your version of it. The odds of someone doing it exactly like you, with the same passion as you, with the same marketing and execution plan as you ARE pretty slim.

    Quote Originally Posted by milesquaredesign View Post
    I texted and left a message yesterday and told her I had a non-disclosure to sign (I know it's a little late for that) and said I wanted to go over the terms of the partnership. She ignored my 2 messages. I am in an absolute hysterical panic now except I have no clue how to protect myself at this stage, IF there is even anything I can do!!!
    I've been through this. I was looking for someone to create a complimentary piece of hardware for my idea. I found a company in Poland that looked like they could do it. After multiple emails they still weren't getting it, so I dropped all of the details..and then never heard from them again. That was my bad.

    Looking back on the emails I can see that they were playing ignorant to get me to spill all of the details. They clearly understood what I needed. I've found out since that it's a pretty standard protocol that everyone in that hardware space has to know.

    If they steal it and make it they still don't have the other 80% of the idea. They'd actually be helping me by softening the market, without me having the incur the expense. I realized that if they made it, I could capitalize on it. I actually want them to make it now. In a way I kind of need them to steal it and put it on the market.

    Quote Originally Posted by milesquaredesign View Post
    On the bright side, I could just be making something out of nothing and maybe she has no intention at all of screwing me. Maybe my imagination is getting away from me. Let's hope.
    Thanks for your help guys.
    Maybe, maybe not. I'd stay on it just to be sure. If nothing else you've learned a valuable lesson that you will NEVER repeat. I'm sure even in the worse case scenario in that she did steal it and run with it that you could still do it, learn from her mistakes, and come up with a new feature or unique spin that would allow you to succeed where she has failed or just doesn't get it because it wasn't her idea.

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    I sure hope it goes better than it sounds like it is going. If you ever do something like that again get them to sign a non disclosure agreement before you show them the idea. I have dealt with a lot of really great people in my business life. However when money comes into the picture even someone you consider a good friend can end up stabbing you in the back. I have had ideas stolen by people I considered friends and it does make you apprehensive. I have learned enough from life's lessons to be careful who I tell what to. If you can avoid it I find it better not to have a partner. Sometimes you need someone else's ability or time but if is better to hire someone for that part rather than partner with them. Well, I hope it all works out for you.
    Ray Badger, Turbo Technologies, Inc.
    www.TurboTurf.com www.IceControlSprayers.com

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    Sometimes friends can be the worst people to confide in. You have to realize that your family and friends generally aren't Entrepreneurs. They can't really give you the kind of advice you need because they don't have the knowledge or experience to do so. Given that, they don't see things the same way. Most have "get rich quick" mentality.

    There have been times I've shared an idea with a friend under strict confidence not to say anything to anyone, only to have it repeated to me by someone else. When asked the friend "Why did you do that?", their response is along the lines of "Well, I only told this person and he's harmless.".

    Friends don't get it, and don't expect them to.

    Just saw a quick little video on Inc | Launch about this: Seek counsel, not opinions...
    http://launch.inc.com/video-7-1-47/a...r-counsel.html

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    Hi there,

    Alright, so I defined your question in the following structure:

    1. How to deal with partners
    2. How to protect your idea
    3. How should you establish the company

    Let me go ahead and tell you that I have no idea about the point 3. I'm not a US citizen so I don't know how does your legal system works there.

    Having said this, I still think I can add some value regarding point 1 and 2 because I'm afraid you might have some miss conceptions, or at least, points in which my opinion differs a little from what you shared.

    1. How to deal with partners


    Ultimately, you must make a choice of either working with your partner or not. As a business owner, you will inevitably face several doubts along the way such as this one. And you cannot be stopped because you're afraid of what the other person might think. From this moment on, you are defending the interests of your business, it's not only about you anymore.

    So, my humble advice here is: go ahead and decide whether you prefer to work alone, work with that partner of find a new one. And then, take the call and have the courage to go in front with it.

    Secondly, I'd like to share that the best way to work with partners will always be with transparency - trusting people. Which means that if you feel your partner is bombarding stuff too quickly - which creates a feeling of overwhelming - you must feel comfortable telling her that all that stuff is great, but let's keep it focused on one step at a time.

    I would never recommend you work with someone with whom, from the start, you feel is getting you too much out of your comfort zone. You want to make sure you work with someone that won't entangle you, at the end of the day, there will be enough daily concerns in the years to come, no need to make it harder.

    2. How to protect your idea

    I'm afraid there is a big and usual miss conception about protecting ideas. Correct me if I'm wrong, but are you afraid she might take your idea and create a business of her own?

    Let me share my brutally honest opinion: the idea means absolutely nothing.

    Now, it is possible that you don't want to read this, and I definitely understand that. But it really is all about the execution.

    Besides, I would even advise on sharing your idea with your target market, the best you can, in order to:

    1. Fine-tune your concept: today receiving feedback and validating your concept is absolutely a must in order to save money and create an effective product
    2. Helps you testing and perfect your sales pitch and future marketing disclaimers
    3. If you already have a product (MVP) or a prototype, allows you to test it and see how customers interact with it
    4. Generates buzz and enthusiasm around your business, which will be a great help to win customers when it is officially launched.

    As a summary, decide whether you want to work with her or not, and if you don't, take the decision to let her know; perhaps it is also a good idea to set some boundaries / rules, as long as there are transparency within the group; do not worry about the possibility that your idea might be stolen, you're missing the whole point, the idea really doesn't matter that much, in opposition to what so many people think.

    I hope it helped.
    Pedro
    Founder at BuildYourDreamCompany.com

    A blog dedicated to teach you on how to make a profit from anything you love to do.

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    My name is Monica Mize I'm a graphics designer and business coach for small businesses and creative individuals. I'm new to this community; I just created my account today but I'm definitely versed in business and business practices. I've been there, done that, I’ve learned this, learning that, tripped here, got up there and then some. Your post was one of the first I saw (about your business partner and how you're afraid you may have given away too much of your vision for your business at the beginning before you got any security for yourself). Here are my thoughts:

    1. Whenever you're afraid that you've shared too much with someone who's suppose to be your partner in business that means you don't really trust the individual you're going into business with.
    2. Business partners who aren't contributing in ways that earn a 50/50 split should never get a 50/50 split. If she is offering a service then just pay her for that service but keep the business for yourself. For example: Although I coach and design for many businesses I do not have any stake in their business. They pay me for a service, I deliver. My clients and I then go our separate ways; nether one of us have committed to anything that will tie each other down.
    3. A Partner that doesn't respond to your messages is not a business partner you want to have, especially at start up.
    4. Since your idea is already out there, honestly there isn't a way to 100% protect it unless you had a written agreement signed before you explained your ideas. The best way to counter someone you feel will steal your ideas is to keep your business moving and because you're passionate about your ideas BUILD it bigger and better. As you grown your business you'll find that the ideas you spilled to this individual will not be the end all to everything you do in your business to make it special and great.
    5. Consider if you can pay her for her services oppose to going into business with her from the gate. Partnerships should be considered (should I really?) and chosen wisely.
    6. Set a standard for your business. If you are speaking with someone about your business and the person you are speaking with begins to control where you're taking your business even in conversation, you have not yet set the Rules or the Standards of your business engagements and that's a must.
    7. Don't worry! Spend more time planning and putting your business in motion. The longer you spend worrying and stressing on the matter the more time is being wasted and with that time you can have things in place before her.
    8. Purchase your domain name for your business so no one else can take it and secure you social media accounts for your business.
    9. If there was no agreements signed stating she's your partner you have the right to change your mind on her being an equal partner.

    I do hope the above helps.

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