Transparent and clear accounts for multiple owners

Imagine starting a factory based on your friend’s demand for a good. After having learned and set-up everything from scratch and supplying the good for some time you run out of cash in hand and ask for your owed sales revenue. Your ‘friend’ informs you that he invested that money into his own product line which flunked and he has no money to offer. Facing a situation where you have no money to feed your family, what do you do?

Or imagine a partnership, with the senior partner investing all the money and takes a significant ownership, and the junior partner manages the business and takes a minority ownership position. After some time when business picks up the junior partner asks for additional perks to has salary, perks that he keeps increasing year on year with the senior partner’s permission. After some time, the senior partner looks at the accounts more carefully and realises the salary figure to be unusually high, even though the presented figure is a total of everyone’s salary in the company. He asks for it to be split showing everyone’s individual wage. After resubmission, it comes to the senior partner’s attention that not only was the junior partner increasing his perks ‘over the table’ every year, but he was increasing his own salary ‘under the table’ as well, year on year, and now takes the lion’s share of the profits, something he has been doing for over a decade. After being confronted, the junior partner goes to the employees, tells them the story from his perspective, and in a selfish and desperate attempt tries to drag them into it.

These are crazy situations, but once it happens direct support is the first step. After which the following course of action is dependent on each situation and circumstance. In the first case study, the owner of the factory had to feed his family, so he got a job and worked in his own factory but after some time, he found trustworthy associates and his own business flourished. With the second situation after some direct support to steady the business, there is still friction between the partners. Karma worked its magic relatively faster in the first scenario, in the second it still has some work to do.

When I started working I was lectured on 2 key concepts, “the ass that you kick could be the ass that you kiss” and “never bite the hand that feeds you”. For the junior partner to bite the hand of the senior, and then in self-defensive (which can also be seen as attempted ass kicking) he tries to manipulate the employees to intervene and take his side, he started to dig himself into a hole. This situation is still playing out but what goes around comes around, and karma will come to collect her dues one day. Until then, my message to every multiple owner company that I have advised is to make sure your accounts are transparent and clear from the start.

 

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