Apr 23, 2014

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Ask a Professional: How can I negotiate a fair partnership?

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Mentoring Hermanas is a Q & A platform on Facebook where your burning questions are answered by a group of professional Latina women.  To submit your question, click here.

QUESTION: How can I negotiate a fair partnership?  I am currently the VP of Sales & Marketing of a start up operation.  Our company is a Corporation with 2 partners. One of the partners has a very successful family business in Mexico about to celebrate its 50th Anniversary.

The problem I have is, my start up company has been in development for 13 months and is ready to launch in 3 weeks.  My boss and his partner feel that they need to re structure because they have invested but not gotten much in return.  They are asking me to take a pay cut or take over the business and give them part ownership.  I feel that this is not a fair partnership.

I have built this from the ground up. Working 80 hours a week and giving up my personal life pretty much.  I cannot take a pay cut.  About taking over, we have a 2 side operation where sales are generated here in the US but they are actually fulfilled in Mexico.  That company doing the fulfillment of orders is also owned by my boss in Mexico.

Things are very tense right now and I have seen first hand how Mexico isn’t always agile and diligent conducting business.  I believe that if I was to even consider taking over the business I would want to centralize the whole operation here in the US.  I know its a lot of information but I don’t know where to turn.  I know I need to consult with a lawyer and a financial advisor but hope you can give me some feedback and your opinion.

PROFESSIONAL:  Michele Ruiz, Business & Entrepreneurship

fair partnershipQuerida Anonymous,

I understand the stress of not knowing where to turn when major decisions are on the table. You’ve described partnership issues, strategic issues and even burn out issues all of which are significant on their own. A key to a successful startup is the team. If there is conflict at this stage, especially about perceived value as a partner and what each has and is contributing, that is a warning sign of continued conflict down the road.

Remember – past behavior is predictor of future behavior. My suggestion in the order of importance is –  a frank discussion amongst yourselves trying to get to the core of what is really driving the desire to want to restructure “the partnership” deal.

Questions to ask yourself – as partners can you really work together?  Are you equal partners or “unequal” in terms of ownership interest and the ability of one partner to force a decision? Are there generational or cultural differences at play? Then I would suggest you consult with a transactional attorney to evaluate your partnership agreement to determine what options you have.

Until you have some clarity and you’ve come to some resolution on your ability to work together as partners, trying to tackle the strategic and operational decisions won’t be fruitful. Assuming you’ve made progress in that area, then consulting with a lawyer who has experience in commercial, financial and real estate transactional matters in both the United States and Mexico would be my next recommendation. There are lawyers in Southern California who have this type of experience.

One last thought – NO business venture is worth risk to your health. If you are not healthy, you cannot be there for your family nor your business. Your health and stress management needs to be a priority. Take care of yourself!

 

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Michele Ruiz

Michele Ruiz

Michele is building her business while teaching, empowering, connecting and inspiring others through her journey. She's a mom, a former news anchor and reporter, public speaker, turned serial entrepreneur. Empowering Entrepreneurs To Empower Themselves!

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