Difference in Opinion re Drawings - any advice?

oompahloompah

Hi everyone
Like everyone else in the country, times are tough, money is tight etc. We are just ticking over at the moment but business is way down on last year and we're coming up to summer, which is traditionally very quiet for us anyway.
Anyway, I've done a cashflow projection for the next 4 months, and we're looking at being overdrawn by just over £15K by the end of September.
DH and I live as frugally as we can, and could realistically reduce our monthly drawings by £1000 per month. We also have about £15K in savings. However the other partners are refusing to even consider any reduction in drawings (we draw the same amount), saying they need every penny they get and simply can't afford to drop anything.
We are friends with the partners but it is not my place to comment on how they spend their money.
Any advice on how to deal with this would be much appreciated.
Thanks everyone

chickmug

Much of my life has been involved in business sales and I am sorry to say but what you describe is exactly how I have found many partnerships. One side not being fair and causing resentment with the other side.

When I say partnerships I include those where the bestest of friends, parents & children, brothers and sisters, have gone in partnership and it can end in tears.

Many partnerships are far worse than being an employee in a company. Unless all partners agree there is often NO decision and the businesses becomes badlu affected.

Anyone who ever asks my advice is NEVER to go into partnership unless with your spouse and not even your children.

So can you break the partnership as these festering issues will ALWAYS be there?

mountainofdebt

I think you are mixing the two issues here, and the issue of the other couples lifestyle isn't really an issue for you to be concerned with.

What is your concern is that of the business and its survival.

I think some serious formal conversations need to be had amongst the four of you of how the business is to survive if the drawings stay at the same level, especially if the other couple are unwilling to take a drop.

How are you trading - are you trading as a Ltd ?

For what its worth OH is in partnership with his best friend and they have ALWAYS taken the same salary - if one doesn't get a salary then the other one doesn't either. In my view if the other couple are not prepared to take a drop then I would be blowed if I would AND I would ensure that I got the money owed to me pronto.

slipp_digby

It would be useful to know if you are a limited company and if you have equal shares/control of the business, what your positions are (Assume you are all director/shareholders)

slipp_digby

chickmug wrote: »

Anyone who ever asks my advice is NEVER to go into partnership unless with your spouse and not even your children.

Your are of course welcome to your opinion, but the simplest way to prevent these issues from occuring IMO is not to NEVER go into business with someone, but to have a shareholder / partnership agreeement drawn up on day one which gives clear procedures for dispute resolution and deadlock in the event of disagreement.

This isnt much help to the OP, but should be a lesson to others.

The majority of failed businesses (including my brother in laws) are due to fall outs between controlling parties often about trivial matters (not that I am saying the OP's are trivial).

oompahloompah

Hi everyone,
Thanks for your replies so far - and I do appreciate that how our partners live their lives is no concern of mine, which is why I am looking for advice really on how to broach the subject again with them.
The liabilities of the business are fairly small - we have no employees. Our regular liabilities are a bank loan, overdraft and VAT. All other expenses are project specific, and the costs are included in our quotes to customers.
We all work from home too, so you will see that there is not a lot of scope for trimming the overheads.
Thanks again everyone, I appreciate all the support and advice

DCodd

Do you use an accountant or do all the accounts yourself?

A chat with a "third party" like the accountant or even the Bank Manger may have more of an effect with your Partners decision not to take a drop?

Savvy_Sue

Do you have an agreed overdraft for that amount? Have your fellow partners realised it could be withdrawn at any time? Have you done a "what if / worst case" exercise?

Have you given them the details of this website and Martin's weekly email? :rotfl: