AskPat 143 Episode Transcript
Pat Flynn: Hey what's up everybody, Pat Flynn here and welcome to Episode 143 of AskPat, thank you so much for joining me. As always I'm here to help you by answering your online business questions five days a week.
Today we have a great question from AJ, but before we get to that let's get to today's sponsor, FreshBooks. If you go to GetFreshBooks.com and enter “AskPat” in the “How'd you hear about us” section, you get a free trial. Check it out, it's the best online accounting software that you can use for you business. When I was just starting out I was just using Excel, it was a really Frankenstein way of putting things together. I only wish I started sooner with something like FreshBooks. It's the best ways to keep track of all the money coming in, money going out, create invoices, all really easily, and it's all good on all devices as well too. So again, GetFreshBooks.com and enter “Ask Pat” in the “How Did You Hear About Us” section.
Now let's get to today's question from AJ.
AJ: Hey Pat, what's going on, my name is AJ. First of all, I want to thank you for everything that you've done over the past, I don't know how many years. I've been listening to you for a long time. I think when I started listening to you, you were making probably about $3,000 or $4,000 a month or something, but it's been a long time, and I've listened to every single episode of all of your podcasts, man, and I've started several businesses just based on advice that you've given. I have a very successful design company, and I've actually had a few startups that I've attempted, and now I'm teaching some social media courses.
But anyway, the question that I have is, in one of the businesses that I started, one of my mentors actually decided to invest in the business. So in that business, I work for a year and a half to grow this business and we grew it substantially. However, we came to the conclusion that I could not do, you know, be the one man show. He doesn't really understand the business operations, but he invested financially in it, so we decided to put the business on the shelf.
Well, since that time, he has attached himself to all the businesses that I'm involved in, or all the ideas that I have. So for example when I told him that I would be teaching social media classes to small businesses here in Atlanta, he automatically just said, “Yeah, we should do that!” And, “Yeah, we should do—” this, and that, and whatever. You know, I know he invested, but it seems like he's attaching himself to everything, and he automatically says that, so it's really awkward for me. I really care about him as a friend and as a mentor, but I don't know how to tell him that, “You invested in one business but this is a different business.” And we decided together to put the previous business on the shelf, so that doesn't mean you can automatically attach yourself to the other businesses that I'm working on.
What I would like to know is how do you deal with a mentor or investor who is, I don't know if it's overstepping a boundary but it feels like he's involved in everything that I do now. He feels like he deserves a percentage of all of my ideas based on the one business that he invested in, us not taking it any further.
I hope I was clear in my question. Again I want to thank you for everything that you've done, and I really, really look forward to my t-shirt, man. Pat, thanks so much.
Pat Flynn: Hey AJ, thank you so much for your question, and it's pretty cool that you're excited about the t-shirt that will be headed your way. But first let's talk about your predicament here. I think it's a very unique one, and I don't know if people listening to this would have the exact same situation going on. So to recap, you have a mentor/business partner that you've been working with in the past for one particular business venture. You've since sort of shelved that and have created new things, but this person feels like they are involved with them and should get a cut of whatever is made. It's definitely a sticky situation, for sure. I think in addressing this question, it's going to help other people who have similar situations when involving partners and other people that may not be in agreement with what you think should happen. Actually, this is very good.
So I'm going to tackle this in two ways, first talking about what you probably should have done so this wouldn't arise, but now that it has, what you can do to alleviate the situation, and hopefully keep that friendship and everything you want moving forward.
First of all, before you start working with anybody on anything, before there is any sort of financial investments from anybody, if you're working with another partner on something—you know I've worked with partners before—the most important thing is to discuss with that person every single scenario that could possibly happen. You should have something, at least a conversation that talks about, “Okay what happens if we end up doing this, or we end up shelving this, or we end up, you know, one person leaves, what happens?” How does the other person get full control of the company then? What happens if the company dies? What happens if it does really well?
Talking about every single scenario is really important because things will arise when you become a partner, and different people have different ways of handling certain situations. Different people have different ways of taking action on different situations. So it's important to get to know who you're going to be working with first, so you can understand what might happen down the road, and address those things now before they do happen, so you're better prepared. And if possible, put those things in some sort of contractual—that's a weird word. You know what I mean, put it in a contract and make it on paper, as specific as you can. Definitely, definitely want to do that.
I would recommend getting other people involved to help that as well. If you have other people you know who have started other partnerships, talk to them, see what they did. See what resources they've used, and perhaps attorneys that they've gotten involved with to make sure things are on paper. Especially when there's money involved, I mean you want to make sure . . . especially if you are actually sort of there as partners for like an LLC or corporation, or something, that stuff has to be on paper. And again, I'm not a professional myself. I have people, attorneys, who help out with this type of thing if I were to go down this road. Doing that and preparing ahead of time is the most important thing.
So hopefully, if you could rewind, if you could take the DeLorean and go into time, AJ, you would sit down with this mentor/business partner on this business and talk about the things that would happen. What-ifs: What if this business goes on the shelf? What happens, does this person have any other share, or equity, or involvement in any other things that are going on beyond the mentorship role? And hopefully you would say, “No, it's just for this one particular business. Everything else I create on my own, or on the side, is going to be my own stuff.” And that would be clear, so that when you get to this point, you wouldn't have to go through what you have to go through now.
So let's move forward to, okay, the situation you have now. I always say, the best thing you can do in any situation is just be honest. Talk to the people you need to talk to, and just be honest. This goes with whenever you make a mistake online: Don't try to cover it up, don't try to walk away from it and not discuss it, talk about it. Actually use it to your advantage if possible, and obviously you should hopefully be using to your advantage as long . . .
Yes, it's a sticky situation. It probably sucks to be feeling like this and having things potentially hold you back in this way, or at least cause confusion. But you should also be using this as a learning experience moving forward, in case you use it again, or get into business again with somebody else. But now at this point, I think again like I said, just be honest. You want to sit down and have a real legit conversation. Obviously it's somebody you've been working with for a while, so you know how this person is. And I think they have to respect you, and what you have to say about this.
And if you could go back into time and talk about, you know, “When I had you come on, I didn't expect you to come on as a business partner for all of my businesses. It was just this one that we shelved, and right now I'm working solely on these things, and I wasn't expecting anybody else to come in. I didn't come in—you know we don't have anything on paper—I didn't come in expecting anybody else to come in this with me. These are my own things, and yes you're mentoring me on them, but we didn't, you didn't provide equity for these particular businesses. You didn't invest in these particular businesses.” I think that would be the best way to go. You sort of just have to take it from there.
And obviously it's not going to be something that this person will want to hear. Or it might just be a misunderstanding, as well. This person might just say, “Oh well, you know I didn't expect to be a part of this, I'm sorry if it came across like that, but I just get really excited about your projects and that's why I always say we should do this, or we should do that, cause I feel like I'm there with you. But I'm still just a mentor to you.” That would be obviously the best case scenario.
The worst case scenario would be—you know it's always good to think about the worst things that could happen. I always ask myself that question, what's the worst thing that could happen? Whenever I'm scared about something that's what I say. When I got on stage for the first time, what's the worst that can happen? And when I really thought about it, it actually wasn't that bad. So when I think about this situation, what's the worst that can happen? You bring this up, you're respectful and honest about the situation. He has to respect you for that.
If not, maybe he flips out and just doesn't want to work with you anymore, just cannot believe this, as long as there's nothing legal that's on paper that says that he's a part of everything you're working on now, then you have nothing to worry about in that regard. And if he doesn't want to work with you anymore, if he's not going to be your friend anymore, I mean you don't want to be a friend with somebody who's like that. Yes, it's probably a great friendship now, but people change, and hopefully he's not the type of person I just talked about who would flip out, but if he is, is that somebody you really want to be friends with? I mean this is a tough situation, you have to face the consequences of not preparing ahead of time, but you also want to use this as a learning experience, and know that if this person doesn't respect you for how you are feeling right now, then it's not someone that you want to be friends with. If this person's your mentor, and he has your best interest in mind, he has to understand that. He has to understand that. And if not, you should probably seek a better mentor elsewhere.
So that's my honest opinion AJ. I would love to hear what everybody else thinks about this. If you want to put a tweet out, actually, and help AJ, put a tweet out on Twitter, #AskPat143, that would be easy to remember cause that's the numerics for “I love you.” Now that I've said that you'll never forget that, but so #AskPat143, and if you have any quick advice for AJ, leave that on Twitter, he'll probably check it out. I'll check out the feedback on Twitter as well. If you listen to this in the future you can see what everybody else had to say, but again I think that this would be a cool way for everybody to interact and help AJ out in this situation.
So #AskPat143, and we'll hear what everybody else has to say and add to the conversation. So AJ, I hope that helps, I hope at least it gives you some direction, it makes you feel better moving forward. Again, I wish you all the best, and I would love to stay updated on how things are. If you actually wanted to update all of us on Twitter, #AskPat143, with how this goes, I'd love to hear about it. And if you want to follow up just send me an email and we can talk about it more, we can even get on Skype if you wanted to hash things out.
So yeah, let me know, AJ. AskPat t-shirt is going to be headed your way as promised, and I can't wait to see you wearing it. For those of you listening, if you have a question you'd like to potentially featured here on the show, just head on over to AskPat.com. AJ, you rock, thanks so much, best of luck.
As always I want to thank today's sponsor which is FreshBooks.com. FreshBooks is an amazing cloud-accounting software that you can use that you can actually get right now for free. Use your free trial by going to GetFreshBooks.com and entering “AskPat” in the “How Did You Hear About Us” section. They're helping millions of small business owners save time with invoicing, and keeping track of their accounting stuff, and it's extremely helpful, especially during tax season, so that's coming up early next year. Let FreshBooks do all the hard work and organizing for you and you can focus more on what you need to be focusing on.
So again, thank you so much for listening to AskPat, and we'll end it with a quote here. Today from Mari Smith, fellow San Diegan actually. She says, “The secret to getting results with social media, is to act like a member, not a marketer.” Fantastic advice, I love that little mindset change. “The secret to getting results with social media, is to act like a member, not a marketer.” Thank you Mari Smith, thank you to everybody listening, I'll see you in the next episode of AskPat.
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