Did i make a mistake investing in my wife's business?

[road_runner]

I decided to "invest" half of my savings in my wife's business (well not her own indeed but partnership)
The business seems promising according to MJ's book, but this is not the purpose of the post
I am having second thoughts of giving her the money, as i don't like at all the way they handle the finances with her partner
They don't seem to even bother bargaining for the office rent price. This is the first thing that rang a bell
The second one is they were too slow on confirming some reservation on a business exhibition so the tickets are now another 100 euro more and another 200 euro more for the hotel rooms. And they don't seem to think this is inappropriate for a start up.
This is not a big difference money wise, but seems to show a trend of not taking care for every cent.

And today i lost my temper when i found out their intend to get company cars which are like 25 % more expensive of what was initially planned as they consider the entry level models not comfortable enough. (Cars are really needed as they need to be visiting places, )

This is total Bs, they don't have their first deal yet.........

Now i need to either find a way to control this or back out. I mean you don't put the horse in front of the carriage , right?

How do i deal with this, any ideas, considering she is my wife, and that i have not yet transferred any funds to their accounts.

 

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[JAJT]

What do you mean by investment?

Did you give it to her because you are a good husband (gift) or do you own equity? Are you entitled a return on the investment? Are you a silent partner? Do you have any actual claim to the business with your investment?

If this was an amount that doesn't break the bank, consider it gone, ignore their actions and only offer advice when asked. Then never do it again. There is a reason business relationships with people you are close with rarely work out.

 

[road_runner]

What do you mean by investment?

Did you give it to her because you are a good husband (gift) or do you own equity? Are you entitled a return on the investment? Are you a silent partner? Do you have any actual claim to the business with your investment?

If this was an amount that doesn't break the bank, consider it gone, ignore their actions and only offer advice when asked. Then never do it again. There is a reason business relationships with people you are close with rarely work out.

well that's why i put the quotation marks- i don't have any legal ground to interfere with their business. I just have a verbal agreement with wife to provide her the money and she will make her best to return it in an year or two.
I can back off but this would mean she would be in a bad spot, as she is committed to her partner. Plus i am quite positive about their business. I don't like the way they seem to neglect the small amounts. They are too focused on the big picture and forget that they will need to survive the bad months first.

 

[1PercentStreet]

back off now if your marriage is important to you

 

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[MJ DeMarco]

don't have any legal ground to interfere with their business. I just have a verbal agreement with wife to provide her the money and she will make her best to return it in an year or two.

Bad decisions precede bad results.

Your post reminds me of this thread.

https://www.thefastlaneforum.com/general-entrepreneurship-startup/43182-startup-swag.html

 

[dknise]

https://www.thefastlaneforum.com/general-entrepreneurship-startup/43182-startup-swag.html

Do they need an office?
Do they NEED company cars?

And they don't seem to think this is inappropriate for a start up.

Because it's not their money.

Until they get that first sale, and for several years after, they shouldn't be putting money towards anything that doesn't make them money. They might argue they "need" and office, but if what they really need is a "space" to work then they should be able to do that from home.

 

[wade1mil]

That's a tough spot to be in, and I'm not sure anybody can really tell you what to do. The two big things that scare me are:

1) They are in a partnership.
2) There is no customer and they are spending a decent amount of your "invested" money.

Not sure what to say other than I'm glad I'm not you.

 

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[prime]

Wow... you really need to back up. From the looks of it, seems like they have no concern for the amount of money it's cost YOU because they're not paying it through their savings it's YOUR savings. I would really sit down an evaluate your situation, because this might turn out ugly, where your money is gone and your wife has resentment towards you...

I've seen this happened to friends of mine...

Office and Cars... WTF? Your wife doesn't have a regular car to drive around? why do they new cars... You better think this through very carefully, your treading a tight rope over a volcano opening...

 

[theag]

How about talking to your wife about the issues? If you already did this, what did she say in her "defense"? Really tough spot to be in..

 

[Rawr]

back off now if your marriage is important to you

+1

Sounds like the money is important to you, I would have a nice long chat with the wife, and try to structure the investment with conditions upon securing payments from customers first. Might be worth it to show that startup swag thread to her

 

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[Ska2free]

I think it really depends what you discussed with your wife when you agreed to give/invest the money. If you discussed having a say in the business as a condition of investing, then you have every right to make your case for reducing the company expenses. If you didn't...if you provided the money as an investment for her to pursue HER business, then you are not in a position to micromanage their business decisions. Every marriage is different, and it is hard for us to know how you and your wife view money in your relationship.

I have no idea what this business is, and yes it seems like they may be overspending, but if you invested your money in your wife's management of her business idea then you've got to trust that she knows what she's doing and trust that you made a good investment decision. Questioning every purchase is a bad investor/manager dynamic in any case, but beyond horrible when there is a marriage involved as well.

Frankly, I have to question why you made an investment in an amount that clearly worries you in a business that you have no control in and with no agreement stating the terms of repayment.

 

[The-J]

back off now if your marriage is important to you

Beautifully said.

Your first mistake is presenting yourself as someone who might invest in her. Your second mistake is thinking that she actually needs 10 grand. Your third mistake is actually thinking she could use that 10 grand to do something amazing.

Back off, man. If she loves you, she'll understand. Tell her that as a shareholder, you don't like the way her and her partner are handling the finances. A company car ISN'T even needed unless neither her nor her partner has a car to work with. Office space ISN'T needed. What's needed is a effing customer!

 

[Deanna]

What does SHE say?

Maybe she is looking for a way out? Does she see these problems? Or is she the "spender"?

Depending on how SHE FEELS about the situation, either

1. Consider it an investment in HER...not her business (rethink offering in the future if she's the spender or doesn't see the issues). She will always remember you believed in HER, even if her business fails.
2. If she doesn't want the money being wasted (cause isn't it hers too?) and sees the existing problems, then let her save face with the partners and say "sorry, my husband won't give me the money now"...be the fall guy FOR HER

From a wife's (25 yrs) point of view.

 

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[oddball]

Bad decisions precede bad results.

Your post reminds me of this thread.

https://www.thefastlaneforum.com/general-entrepreneurship-startup/43182-startup-swag.html

https://www.thefastlaneforum.com/general-entrepreneurship-startup/43182-startup-swag.html

Do they need an office?
Do they NEED company cars?


Because it's not their money.

Until they get that first sale, and for several years after, they shouldn't be putting money towards anything that doesn't make them money. They might argue they "need" and office, but if what they really need is a "space" to work then they should be able to do that from home.

First thing I thought of when I read this, I knew someone would have already posted it.

 

[road_runner]

https://www.thefastlaneforum.com/general-entrepreneurship-startup/43182-startup-swag.html
Do they need an office?
Do they NEED company cars?

Office - well we have a little kid, which doesn't allow my wife to do anything else when she is home, the 2 year old demand attention all the time from her , so i can agree she needs a place to work from. The office also has a store space, which they must have by law as it is medical stuff to be held in it.
Car - they need to go to customers all the time, i am expecting about 2000km per month for each of them.

That's a tough spot to be in, and I'm not sure anybody can really tell you what to do. The two big things that scare me are:

1) They are in a partnership.
2) There is no customer and they are spending a decent amount of your "invested" money.
Not sure what to say other than I'm glad I'm not you.

They seem pretty certain they will have a deal in the first month because of they are very well networked and they said they have couple of guys who showed intent to buy as soon as the legal stuff is sorted out. What i should have thought is that the other partner is also a wife sponsored by her husband. But her husband is a top corporate lawyer so the investment money is some small amount to him. So he is not paying much attention to the expenses i guess.

Wow... you really need to back up. From the looks of it, seems like they have no concern for the amount of money it's cost YOU because they're not paying it through their savings it's YOUR savings. I would really sit down an evaluate your situation, because this might turn out ugly, where your money is gone and your wife has resentment towards you...

Office and Cars... WTF? Your wife doesn't have a regular car to drive around? why do they new cars... You better think this through very carefully, your treading a tight rope over a volcano opening...

It is ugly enough already. I regret doing it tbh, Wife doesn't have a car, as she has had company car in all her previous jobs. So we never had to buy one for her

How about talking to your wife about the issues? If you already did this, what did she say in her "defense"? Really tough spot to be in..

She says they need this and tries to justify every act they do. But if i tell her would she be giving with ease the same money to me if i behaved like this she is not so vocal.

+1

Sounds like the money is important to you, I would have a nice long chat with the wife, and try to structure the investment with conditions upon securing payments from customers first. Might be worth it to show that startup swag thread to her

I doubt she would ever consider this, as we have slowly reached a point we don't like spending time together. She considers me stingy and says once they start selling they can not return the cheap cars without losing much. I can see some point in here, but still not liking it

I have no idea what this business is, and yes it seems like they may be overspending, but if you invested your money in your wife's management of her business idea then you've got to trust that she knows what she's doing and trust that you made a good investment decision. Questioning every purchase is a bad investor/manager dynamic in any case, but beyond horrible when there is a marriage involved as well.

Frankly, I have to question why you made an investment in an amount that clearly worries you in a business that you have no control in and with no agreement stating the terms of repayment.

I am not blaming anyone but myself for being stupid. Indeed things happened a bit quick, so we never cleared out the details. which is the biggest mistake of all . Basically they need two deals a month to cover their expenses.

Beautifully said.

Your first mistake is presenting yourself as someone who might invest in her. Your second mistake is thinking that she actually needs 10 grand. Your third mistake is actually thinking she could use that 10 grand to do something amazing.

Back off, man. If she loves you, she'll understand. Tell her that as a shareholder, you don't like the way her and her partner are handling the finances. A company car ISN'T even needed unless neither her nor her partner has a car to work with. Office space ISN'T needed. What's needed is a effing customer!

See above, they need cars, but i would agree they can go for 1 not two, at least for the first couple of months.

What does SHE say?

Maybe she is looking for a way out? Does she see these problems? Or is she the "spender"?

Depending on how SHE FEELS about the situation, either

1. Consider it an investment in HER...not her business (rethink offering in the future if she's the spender or doesn't see the issues). She will always remember you believed in HER, even if her business fails.
2. If she doesn't want the money being wasted (cause isn't it hers too?) and sees the existing problems, then let her save face with the partners and say "sorry, my husband won't give me the money now"...be the fall guy FOR HER

From a wife's (25 yrs) point of view.

Well problem is they are committed to each other, so it would be a bit awkward to break the deal like this. Anyway she is quite impulsive which leads to bad decisions.
Otherwise it is exactly the way you describe it: i wanted to show i believe in her, but i felt for her words, that it will not be 20k for sure, it will be 20 k maximum, still the way they are going i can see this amount lasting like 4-5 months max.


So far the only thing i am trying to accomplish is to find a way to guarantee my money back. If i can do that, then i am giving her the money and staying out of her deals. They still have good chance to succeed so i am not entirely screwed yet.

And lesson learned although it will cost me 10k - never do business with family members.

 

[Rickson9]

This isn't going to end well is it?

 

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[100k]

Maybe give the money as and when they need it! Instead of giving her the whole lump sum all at once.

If you give it to them in parts then you still in control (to a degree) and you can make sure they don't waste it on things you don't agree with, after all its your money!

 

[road_runner]

So far i managed to present her with a sum of their startup expenses, and show her they will have like 50 % of their capital locked into cars/office/state licenses, this seems to have made her think . As they know they have like 2 % of the capital due every month for regular expenses.
And this is without money needed for buying the actual product, as in the beginning no one would take them seriously enough to give them a delayed payment option of 30 or 60 days.

Let's see how long this would last

 

[JAJT]

It sounds like very typical "do everything but work" behavior. Focusing on the fun distractions that don't make money.

They want to line all their ducks in a row before acting - trust me, there is always another duck to line up. Next they'll be talking ergonomic furniture, whiteboards, hiring a secretary, viral marketing, print media, 800 numbers, press releases, new computers, tablets, a fancy website, adding chat capability to it, etc, etc etc...

Go ask them what their "to do" list looks like and look at where "get a client" lands. If it's under custom-made bobble-heads of their likeness then I can suggest a very good whiskey to drown your sorrows in.

 

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[Esquire]

I don't like partnerships for this very reason ... lack of control ... not to mention the potential "legal" issues involved if the partnership fails or the partners are at odds.

So the other side is married to a corporate lawyer ...? Lucky you. Better have a rock solid partnership agreement is place to protect your wife if this thing goes South. Oh wait ... let me guess ... the aforementioned corporate lawyer drafted it, right?

I don't envy you in the least. But ... at least you know "who" is responsible for getting himself into this mess and ... you got it ... NEVER do business with friends and family.

Live and learn.

The only thing I would add is this ... if you don't like spending time together ... time to get into couples counseling or start contemplating a date with divorce court.

Spending a lifetime living with someone you "do not like spending time with" is no way to live.

 

[Milkanic]

Your marriage is going to fall apart if you continue to harbor thoughts and feelings that are not shared/expressed.

I suggest seeing a marriage counselor if you can't sit down and have this discussion with your wife.

 

[road_runner]

So the other side is married to a corporate lawyer ...? Lucky you. Better have a rock solid partnership agreement is place to protect your wife if this thing goes South. Oh wait ... let me guess ... the aforementioned corporate lawyer drafted it, right?

It's a standard LLC document, i think it is ok, as much as i have any knowledge in this matter. Plus they are in a dead lock. I mean both sides are equal, so not easy to screw each other, but i admit i have thought about that.

 

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[JAJT]

I mean both sides are equal, so not easy to screw each other

Impossible to settle disagreements with business decisions as well.

I will never enter into a 50/50 agreement with someone. One side should always have majority control.

 

[road_runner]

I am considering offering her a contract for lending her those money on 0% interest rate, but due in 2 years. In this way i will have a written document that she needs to return those to me. And then i will let her do whatever she wants with it.
What's your thought about it

 

[theag]

I would give it to her in increments. They show you exactly what they need and how much it costs, alternatives etc. If you think they're spending too much you just stop lending until they find cheaper alternatives. So basically a permission-based line of credit or whatever you would call that. Just a thought.

 

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[JAJT]

Dude, you don't get it.

You want to tie your WIFE to a contract? What happens when she doesn't pay? Divorce? Lawsuit? What good is a contract you don't plan to enforce when things go sour?

Look. I see three options:

1. Give her the money free and clear. It's a gift. You're a good husband. You wish her well, kick up your feet up and stay the hell out of it.
2. You invest in the company. You enter into a contract with the COMPANY (both her and her partnet) that gives you some kind of ROI claim. This could mean becoming a third partner with a say in the business, it could mean equity, it could mean dividends. Anything that gives you SOMETHING for your money.
3. The smartest, best option. Don't give them any money at all.

 

[road_runner]

The idea is not that i am going to use it, but she would think i would. And if things get really ugly i would get it back, as we co-own some properties.

P.S Of course it would be on increments.

 

[JAJT]

The idea is not that i am going to use it, but she would think i would.

...

 

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[Deanna]

The only thing I would add is this ... if you don't like spending time together ... time to get into couples counseling

Agree

Dude, you don't get it.

You want to tie your WIFE to a contract? What happens when she doesn't pay? Divorce? Lawsuit? What good is a contract you don't plan to enforce when things go sour?

Look. I see three options:

1. Give her the money free and clear. It's a gift. You're a good husband. You wish her well, kick up your feet up and stay the hell out of it.
2. You invest in the company. You enter into a contract with the COMPANY (both her and her partnet) that gives you some kind of ROI claim. This could mean becoming a third partner with a say in the business, it could mean equity, it could mean dividends. Anything that gives you SOMETHING for your money.
3. The smartest, best option. Don't give them any money at all.

Just chalk this up to lesson learned and work on the relationship issues - work thru those and you will be better off all the way around.

 

[Amail]

I do not believe what I'm reading here.

This is your wife we're talking about, not some investment. If you back off after alluding to "investing" it she'll never look at you the same again.

Consider the money gone, and get comfortable with it but quick. The sooner you accept that, the sooner you can move on with your life. If your wife and her partner manage to make it work and do pay you back, so much the better - consider it a windfall and use it to take her on a kick a$$ vacation. Do NOT go into this thinking you're going to get your money back, and don't under any circumstances say anything that will make her feel like a failure if this turns south on her. Be supportive, but I really doubt the tough love approach will work in this case.

You know about not partnering with family, right? That goes tenfold for spouses. Marriage and business rarely mix well. You can scrape $10k back in a year or two at the very most. Your marriage should span many decades. Don't ruin the marriage over business - it truly is not worth it.