Business going down.

[adbusiness]

Hi,

I’ve been running a software company with other two partners for last 4.5 years. I own 20% of the business and the other two partners own 40% each.

The sales division (manage by one partner) has been heavily underperforming for last one year and this has been dragging the business down. We had a numerous management meetings about what to do but without any success. I was suggesting a cost cutting and also to get rid of unproductive people (including the other 2 partners as they have only minimal contribution to the company revenue but taking great salaries). The other 2 partners were only saying that we need to work harder and try more different things and need to learn more. They don’t seem to see the real picture (truth) of what has been going on. They seem to just hope that miracle will happen to save the business.

So the company has been going the way (down) the other two partners had decided against my plan and on my expense. Only my division generates the majority of the revenue for the business.

As a result of the wrong management we (3 partners) have not been paid a cent for last 7 months. We can only afford to pay the staff salaries.

So I’d like to ask for advice how to deal with this mess. I’m thinking of cost cutting, selling the business or liquidate it.

Thanks,

[v2Media]

Thanks for posting adbusiness.

What kind of software does the business provide? What kind of advertising and marketing is in place? What is the current explanation for drop in sales?

Worthwhile advice would only come from more information.

[adbusiness]

Thanks for reply v2Media,

We are the reseller of the ERP solution from one of the world’s software giant. The same ERP solution is also sold by other business as well. I guess in total it’s being sold by roughly 15 companies in Australia. Some companies are selling well but not us. Why?

We’ve organised a few events, doing a cold calling, campaign and networking. But with minimum return.

As I see the partnership in business should be fair. It means each person should contribute to the business equally and also be accountable for that. The lack of sales is mainly contributed to the person’s inability to make sales rather than the market itself. If other businesses can sell why we can’t. Also the attitude is wrong as every month the person promises to make it up the next month and so on and it’s never ending story with no plan at all. If it’s me I would just leave the business and find another salesperson who can deliver. However I’m the minor shareholder and I can’t just tell him to go, which I’ve already tried but the other partner did not want this to happen. Maybe I should just leave the business but on the other hand I really care about this company. If I leave the business how then am I going the get back the unpaid salaries for last 7 months? Or can I sell my shares? Or liquidate the business?

[AshleyWhiteBusiness]

I suggest you consult a lawyer about this. Also, check your contract and see what you might be missing. It is wise to deal with this legally since you are not the only owner.

[v2Media]

It sounds to me as though the partner in charge of sales is in denial. The other partners most likely share an alliance with the sales partner that goes beyond the business. You need to find a way to approach the sales partner that will re-motivate him to change and improve the sales/marketing process. I would say this impossible without the support of the other partners.

So the path to salvation is working on getting the other partners to align with your perspective on sales. The first suggestion that I'd consider is pitching a new sales method to be implemented, sales systems geared towards large companies. With that solution in hand, the other partners may be more willing to align with you and agree to coherce the sales partner into managing sales differently and retraining sales staff with the new methods.

Selling to Big Companies by Jill Conrath is a good read on this topic. I also have another great title archived in the office somewhere that revolutionised b2b sales a few decades ago. For the life of me I can't remember it's title or author though.

The path to bailing is simple - get a solicitor that specialises is contract law.

[JakeThomas]

I know you have invested 4.5 into the business - but have you considered asking them both to you out?

With you only on 20% it's always going to be an uphill battle trying to negotiate with two others that have 40% and for the most part, it sounds like they aren't really to keen to change things around.

It might be time to cut your losses and go out on your own.

[Linda Enever]

Jake has a good idea on the buyout as the stress maynot be worth it. My only other suggestion would be getting a consultant to sit down with the management team to see if the goals are all aligned and everyone is on the same page. I have seen hubby do this with many of his clients and it is amazing to see how much is assumed between partners and that lines of communication need to be more open.

Hope you can save your business or get out but what ever happens you need to do what is right for you and your family

[JakeThomas]

That is actually a rather excellent point Linda - getting a third party mediator in to help work through issues!

[Linda Enever]

Yeah you would be surprised how often people don't know that they are not communicating

[ceosidekick]

Is there sufficient documentation in place?
Often problems like this can be fixed by returning to the basics...

Business Plan is number one. Look at the executive summary, identify your target market and major competitors. See what that you doing well and what they are doing poorly.
Re-write your SWOT analysis and start again!

If the sales and marketing partner is letting the team down, sit down and discuss what the problem might be.
Communication channels within are business are extremely under rated. Without established, functioning and effective channels communication the business will implode.

I am a director of a company called CEO Sidekick. We operate a website out of Sydney, Australia which specialises in helping businesses get these key areas established and functioning through profession documentation.
Check out the website and please don't hesitate to contact us with any questions.
http://www.ceosidekick.com.au/