What if your partner seems to be a bad person?

Greetings. Currently I work for a bunch of companies as the CIO and recently I've been offered a partnership at a startup company. I decided to take it as a part-time, for the start, and then move on in the dependency of the business growth. It is an it-outsourcing company, doing complex service for the IT stuff. At the beginning, there is was three of us, partners:

• The one, who responsible for all the financial stuff, contracts, documents, etc (financial guy )
• The one, who responsible for a advertising, getting new clients, etc (sales guy )
• The one, who keeps the main direction - IT-outsourcing field running in a technical plan (me ): writing specs, doing some extra-special technical stuff for the clients, training our team-members and so on

We was growing fast, got some serious clients and made a great integration projects, but this autumn the financial guy has tragically died and one month later the team-leader (who was my right hand and company's main specialist) has quit.

However, someone has to take care of the financial things and we decided that it will be better for sales guy to do this and I temporarily took care of the things our team-leader had worked on.

The weird things started to happen:

• My share, which was on 1/3 of the company's income left on the same level, but Sales guy's share grew to the 2/3 of all the money.
• The salary day became quite unstable, sometime it takes two weeks to get things done to pay a monthly salary to the employees.
• Despite our agreement, Sales guy dropped off some of the financial duties on my shoulders.

Following all this, we turned into a rather unstable company. And now, I'm in the middle of something. Should I quit or should I stay and try to take over the control of the company, to not let him to ruin it? If I quit, the company won't be able to do some of the contract duties, and as follows the company will be a bankrupt soon. I don't want this to happen, because my friends work there, the whole team are very good people and I don't want them to stay unemployed. I don't get any income of the company for the last three months, so it would be painless for me to get out of there, but maybe there is a different way? So here is the question.

How to deal with an unreliable partner?

How to keep the employees in a difficult situation?

How to keep the company running, if all the administrative instruments are in the hands of the unreliable partner?

Someone said: you work not for the people on the top, it is always for your subordinates, for the ones below you. So should I just stay for the people below me?

Thank you very much.

UPD: Thanks all for the great solutions to my problem, I hope that no one will get into the same situation but if someone will - here one will find a lot of great advices. Thank you very much. I'm not yet decided what solution to use, I need just a couple of days to think it out.

The most important thing to recognize, and the very first thing to consider, is that the person WILL NOT CHANGE. It absolutely WILL NOT GET BETTER. So you either have to decide it's time to fight 'all-in' for control of the company or bail out, knowing it will fall apart.

If there are problems with employees getting paid, it's a symptom. It's the proverbial tip of the iceberg. Rest assured that if the partner can't execute on the most basic things like payroll, what do you think is going on with the really big, really difficult tasks?

First off - I'm sorry to hear of your loss(es). Losing a core partner is never easy, certainly under these conditions, its even harder. Having your team-lead walk out one month later is adding insult to injury.

That said - it seems that there was a true need to have separations of duty - tech, sales, financial - and it proved successful from the start.

Why would you think that such an arrangement isn't needed now?

Sure, the finance guy is gone, but his duties are not - and neither are the sales and tech duties that you all performed prior.

I understand that in a startup you wear multiple hats - and sometimes those hats fit, othertimes not. But the work remains, and it has to get done.

I think vilifying the sales guy as "unstable" when you try and have a "hunter" persona try to do a "gatherer" task and fail (no surprise here) isn't really getting to the point. (s)he doesn't have the financial gene. Financial duties are likely cutting into the sales process, and both duties are not getting done.

Being blunt, as a leader, you need to get past the finger pointing and figure out how to get the financial duties covered with as little impact to the sales / tech duties as possible. Have an honest discussion with your remaining partner. Put things on the table. Come up with some sort of business continuity plan. Retain an accountant. Bring in a new person.

As the remaining partners, if you cannot come together to address this problem together, then likely your company will fail, since it can only operate with the third partner acting as the glue to hold things together.

I wish you success in your efforts - it's not easy, but nothing worthwhile is.

Sounds classic. Get out.

At the very least, given the structure of the initial partnership, your partner should be open to hiring a new finance guy. This might help stabilize some of the administrative tasks and allow the sales guy to focus on sales.

To the extent you believe in your services, potential clients etc but have a personal issue that is irresolvable, there are two courses of action:
1) The 'give it all up' type suggestions made by others here

2) be upfront with your partner that there's a misalignment in your priorities and transition out of your role.

The second approach may allow one of your friends to step into more responsibility, give the company a chance at avoiding bankruptcy, and be a 'good faith' effort that leaves your mind at peace.

I'm not sure if it's best to paste a link to a stack overflow/blog post I wrote about this or just paste it here again. If someone can share what's ideal, I'll edit this post.

In the meantime:

Partnerships are harder than marriage. They will test everything you have ever known about yourself and your ability to connect and stay connected with someone.

Getting on the same page, and staying on the same page is a main challenge. Business partners often have a different goal. One type wants to grow forever, while others want to coast.

When ethics, values and morals come in to play and you have doubts (assuming you aren't an unsavoury person yourself), my alarms usually go off.

You will likely be unable to hand off "dealing with finances" unless you want them done right. I've always believed it's easier for tech folks to learn the business side than vice versa so if the income is there and the issue is stabilizing your internal billing processes, that's not a new problem and one that I think many people here could probably help you figure out.

I'm happy to lend you an opinion or share how my setup is with anything you might need as it sounds like it's not worth walking away from something that has a working business model, just not working partners. Of course you know the details better but try to listen to your gut and ignore your mind/heart, they just are worrying because they don't know what to do.

My own setup is as follows:

1) Fogbugz - for everything. Development, bug, signoffs. If theres no case number, it doesn't exist to me.

2) Freshbooks - does time tracking and invoice generation. Getting the money and keeping it flowing in is critical. I have found no more polished and slick tool that I actually use more easier than scribbling in a notebook than Freshbooks.

3) Accounting software - I would consider hiring out the book keeping.

In a partnership, if you do more, you get more. I believe very much in meritocracies so that may have biased what I wrote above. All the best :)

To put it simply my advice is: GET TO THE CHOPPER! a.k.a GET OUT now before this other guy drags the company down into debt, burns you out and dunks you into a pool of debt so deep you'll never climb back to the surface.

If you don't get out, this other guy is eventually going to realise the company is at the point of no return and bail, leaving you to fix everything up. Don't let his problems become your own. You can try and talk to him, but you run the risk of losing everything if he doesn't listen.

I was in a similar situation, and I advise you to get out. The damage from a poor collaborative/ownership relationship will take its toll, no matter if you try to 'do the right' thing for your customers and for your colleagues. Also, if a major shareholder is driving the company in a bad direction, realize that your equity stake is becoming less and less valuable to fight for.

Don't undervalue the dignity of your own labor.

When this happened to me I was able to split the company into two. I selected who I would like to come with me of the employees and they all chose to come. (In fact, some I didn't choose wanted to come.) We split the customer list randomly. While this was not great for the customers that we didn't take with us, it was better than it being not great for all the customers.

Easier to quit AND help your subordinates find NEW jobs than to work with unreliable partners.