My 1st business partnership

3 friends from Rotorua all have its strengths and marketing channels

Overviews

Partners (ZL, JL & MW share all the business’ profits and losses, responsibilities and debts according to their partnership agreement.
Partners shall specialise and focus on strengths
Partners can bring in more capital investment
Business open 6 days a week

*How much each partner puts into the business

Each partner put $3000 as start up fund into a Westpac business account
$2260 paid to the contractors by JL to build up the showroom, ZL & MW have paid back the owing amount to JL individually

*What property is included in the business?

Any current and future client lists, suppliers or any resources are included in the business Any intellectual properties include but not limited to logos, trademarks and inventions are property of the business

*Allocation

33.3% of the company shares allocates to three shareholders

*What each partner will do day-to-day

1,2 3 shareholders are committed to work for the best interest of the business xyz

*How you’ll resolve disputes

Vote, agreed majority voters(2 voters) override the 3rd vote

*What happens if a partner wants to leave on holidays

2-month out of 12 month periods that absent cap on both domestic and overseas trip, if 2 month threshold is exceeded, then 2 month of annual individual profit will be allocated to others shareholders

*Withdraw and leaving from the business

Confidential agreement needs to be signed prior leaving the company
12 weeks notice needs to given to the other two partners if one partner decide to leave
If one partner is leaving or does not involve the business activities for more than 1 year, then this will activate voluntary withdraw.
One partner leaving from Rotorua Kitchen&Flooring after first year of operation, if one partner decides to withdraw, he can recoup the initial investment and the financial year individual profit.
One partner leaving from the business within first year of operation,he can share 1/3 financial individual profits.
During first year of the operation, one month absent cap, over one month and less than two month will considered as one and half month out of 12 month periods then profit deduction from individual profit allocation from that financial year.
$24000 is operational threshold on the bank account
10% profit for shareholder for taking longer holiday
Deposit

*Omission

Omission/mistakes on measurements, design and quote will be firstly liable into company profits, if losses still occurred then individual partner is liable for rest of the losses and it should be AVOIDED at all times by all partners

Cut in short, less than 6 months of the business partnership, the business started to get some traction but two of the shareholders have another commitment while another shareholder want to expand and get two other shareholders to invest more funds into the business.

Two shareholders(include myself) do not want to invest our own money and the another shareholder somehow convinced us to buy us out without any compensation.

I was thinking of the opportunity cost at a time and just want to exit the business even losing the initial investment and another shareholder want the initial investment fund returned.

We can not get on the same page and used the majority vote to move forward. I convinced another shareholder to exit along with me and that was it.

Hard lesson to swallow as do not do business with your friends.

If you do, set up a clear exit policy and everyone signed them prior setting up the business.