Burn Out-Finances Longest intro in History?

[ready yesterday]

Thank you kats! We do have articles of incorporation, stating president, vp, CEO, secretary etc. I do not remember anything other than that, meaning actual job description..nothing beyond our titles.
I do agree that I probably do not have ALL of the paperwork, I have the taxes, which of course just lay out what we made and paid, but nothing with each partners job description. Those may actually, embarrassingly, not exist. I tried to get all of us to do these, back when we were all just broke friends, on snd off for a few years ...no one did and there was only so many times I could beat my head against the wall.

I have been great on the work end, but awful on the business end...as more than on person has pointed out. I really am SO bad at the business end that some here doubt my story. Imagine what it's like to admit something like this to someone you know.

I actually do know a couple of attorneys, I have been too embarrassed to admit a lot of this for years, and of course do not want to be repped by a friend or acquaintance.

I will ask around though, thank you. Just talking about this after an exhaustive explosive week (i started writing my intro on Friday night on the tail end of of a nightmarish 7 days, again) has been not just therapeutic but has lead to so much obvious information that I should have considered years and years ago.

Thank you for the tips. I will call my favorite lawyer friend tomorrow who may know someone in my area, and start there, and follow your point by point directions.

I honest to god have been so overwhelmed I have not known where to start. So thank you for a starting place.

I will also revisit the DH insurance. We are thinking catastrophic only ..as he has been to a dr once or twice in all the years I have known him..and his years of having no insurance I think is going to put his premiums thru the roof.
As my promise of being shorter in my posts, flies right out the window.

[ready yesterday]

Aaaaaand..we are an s-corp. Hard
gulp.

[Letj]

Quote:

Originally Posted by ready yesterday You seem to have cut yourself off. Anything you would like to add?

I did and using a cell phone doesn't help. Reading through the rest of your posts, I think I get it. What it really looks like is that you have trouble standing up for yourself. You seem paralized by fear but to get this all straight, you need to confront your partners and work with a lawyer on the best way to get out of the one-sided situation. It seemed to me that at the very least, you should be paid a salary in addition to profit sharing. Seems to me that with the other partners getting 100k to do very little while you don't get much more than that is quite odd.

[Htown Harry]

I don't minimize the importance of legal advice, but their valuable services come at a price. Katsmeow has no doubt given good shopping advice.

But here's a question for you, before you start dialing the phone. Who will the lawyer be working for, you or the corporation? Your whole post is about your interests diverging from those of the partners. A good lawyer will be sensitive to avoiding conflicts of interest in providing his services (unlike the accountant / partner?).

Other thoughts on why it may be less than optimal to start with a lawyer...With so many open issues and questions on the business structure, you'll spend a fair amount of upfront time (and money) on document review, strategy development and other non-legal matters. Second, there will be inevitable conflicts to be resolved during the workout of your business relationship with the partners. Without painting the brush strokes too broadly, let's just say that some lawyers might see the prospect of resolving differences at the courthouse as more valuable to his / her bottom line. I think you want to have at least the outline of a plan for a successful workout in mind before sitting down with a lawyer.

So what's the alternative for taking action now? Not being in a small business, I can't offer specific experiences. My thought is that you need a personal business mentor, someone who can assist you with the goal-setting and development of strategic alternatives for exiting your role in the business.

SCORE seem to fit the bill. I know nothing about this organization other than it is associated with SBA and they have been around a long time:
Free Small Business Advice | How-to Resources | Tools | Templates | SCORE

There may also be a university business school in your area that provides some sort of workshop or "clinic" services for startups and small businesses. The idea would be to tap into a resource that would help to define your issues and challenges in a way that allows a lawyer to zero in on the professional legal advice and tasks.

In either case, I'm guessing they might welcome the chance to talk with someone other than underfunded startup entrepreneurs seeking to become a millionaire by inventing widgets in their garage.

Idea number 2: start having a periodic, attendance required business meeting of all the partners. With minutes. There's much less of a chance that you'll find common ground on the evolution of the business structure by trading e-mails and one-on-one phone calls.

Idea Number 3: Talk to an insurance agent. The generic advice is that the family breadwinner needs sufficient disability and life coverage to provide a smooth path for the family if disaster strikes. But here's another potential twist: get the partners involved after you determine what it will take to protect your own interests. If you are as critical to the organization as you say, then it may be in their interest to have the company buy some additional coverages. Perhaps the way you could approach it is: "We've got a good thing going here, but we're all at risk if partners or key employees become unable to work. Let's have someone come in and give us an assessment." Where I'm headed with this is both practical and strategic. First, it's always good to manage risk. But the side benefit might be that you would establish a third-party assessment of the relative contributions of the various partners' role in the organization and their value to the partnership?

Just brainstorming...

[rodi]

Quote:

Originally Posted by ready yesterday So, ah. with 500,00 in the bank combined with a a mortgage payment of 1500.00, half of that paid by the rental property. enough to retire on? or a 2900 payment on a morgage with 800.00 of that paid by the rental, with 850,000 in the bank enough to retire on? or live on from age 56 to 62 and a half.

I would run through the various calculators... fire calc, fidelity RIP, financial engines, quicken lifetime planner, i-orp.

I also am concerned that your goal is to get to SS draw but your spending seems higher than what you'll bring in for SS.

Just as an example - our nest egg is between 2 and 3 times your $500k, we have rental income of $1200/mo... but our numbers don't really work till we get rid of our mortgage. I'm only 3 years younger than you and my husband is almost at SS age. Until you run the calculators... you won't know if it's doable. Until you know your budget and whether you can live in a tighter budget, you won't know if it's doable. Nothing is scarier than being broke and past working age.

[ziggy29]

Quote:

Originally Posted by ready yesterday Well damn, I thought it was better than making a lawyer joke. I gotsa get myself more familiar with the tone here.

Around here, replace "lawyer" with "annuity salesman" and you'll be on the right track...

[JoeWras]

Quote:

Originally Posted by ready yesterday We have not looked into insurance yet for the DH as of COURSE the partners say no (they have theirs through their JOBS and none are married). All of our employees are insured, but none are married. This is one of our biggest worries, of course, but DH feels invincible.... Both of us have found going to the rx without insurance is quite managable as some doctors will adjust their rates, but catostrophic is a whole different ballgame.

Welcome. That's a fascinating intro.

The quote above stands out to me. So, you are pulling in 16k per month, but you don't know "where the hell" was going. Congrats on the rest of your post, because it sounds like you are making good progress on that. That's a great start!

And then there is the partnership legal stuff. I'll leave that to someone else as they discuss it.

But the above. Before you ER, you need to get DH taken care of. What if DH slips and breaks a femur and is hospitalized for 2 weeks (I've seen that happen). Worse, what if DH needs open heart surgery?

Mercy me, ready yesterday, you are playing with fire, especially at this age -- I assume DH is 50-something. Get DH some catastrophic coverage pronto, then get the rest of your affairs in order.

That's my first take.

[Gatordoc50]

As far as the rentals go, I find it useful to calculate the return of investment based on anticipated final sale proceeds. For instance, let's say you net 12 grand from your 300k rental. That's a return of 4%. plus you need to add anticipated appreciation of say 3% for a total return of 7%. Do this exercise every year for each property.

[panhead]

This has been an interesting, if not convoluted post. The op appears to be very distraught, and I can see why. I have friends that own small business, most are family businesses and the conflicts are similar to what you indicate here. So, my advice:

Suck it up!!!

Let me explain: you say you have 2 years left on this contract for the "large company" Do what you have to do for the next 2 years to fulfill it all the while working on your plans to RE (sell rentals, etc). Also during this time, find that lawyer to consult with so you understand your options and what happens if you leave your company, etc.

THEN: At the end of the 2 years, it appears the contract is over. Re-negotiate with your partners at this time (or when a new contract with the large company is being negotiated) to change your roll in the company to closer what they do. Prepare a business plan of how this is going to happen, hiring a replacement while you mentor them, whatever. Whatever happens, this HAS to be in writing and reviewed by your company attorney and your personal attorney (probably obvious).

Obviously without firmer details, I don't know if this is feasible or if it even makes sense, but from what you wrote, it fits the problem. You are stressed and want out now, but that ain't gonna happen with your current situation, you need to engineer either your exit or your new (lowered) responsibilites within the company.

...just my $.02...

[jim747]

I understand the feeling that we are the most important cog in the wheel. Believe me, been there...done that. Taking personal time can be difficult. Here is a fun read. https://www.cusys.edu/eld-catalog/do...tMonkeyHBR.pdf

[Rambler]

Ready_yesterday, you are not. Gonna put it point blank. You are not gonna make it to the end with 500k plus SS at 62. Nor with 850k. You mention all the things you can give up...please know that it will be harder than you imagine. The people who can make it with those amounts do not have the lifestyle you have had, nor the 900k home you have had. Since this is California, I would not expect prop 13 to protect you forever, and heathcare costs alone, incl insurance, should be expected to eat up 150k plus or minus between the ages of 56-65.

Now, let me ask a few questions: 1) who is the CEO/president/chairman?
2) if that is you, do you determine the salary of the other partners?
3) do you have regular Board meetings?
4) if the CEO is you, why haven't you already hired someone to train up to take your place? Do you require all other shareholders' approval to hire?
5) if you are not the CEO, why not? I would suggest demanding that role, since you are the main player in the company. You have a lot of leverage here in my opinion. You can demand the role, since it appears no one else can do it.
6) I believe you mentioned the other shareholders were taking 100k salaries for 1-2 hours per day. Is that really salary? Or is that profit distribution? I think it would be appropriate to separate salary and profit distribution from each other if you have not done that, because it sounds like you are doing an awful lot of the work for just a little more than what the others are taking for their meager inputs.

I believe that you can do better for yourself by shaping up the business and prepping it for the future than by focusing on retirement. By doing so, you would be able to sell the business and retire, or not sell the business, contribute an hour or two per day, and semi-retire. Here's what I would do:

1) demand the CEO role if you don't already have it. Get appropriate decision making authority along with it.
2) convert to a c-corp.
3) clearly separate dividend distribution from salaries for shareholder input.
4) document everything
5) hire and train someone to replace yourself and begin the preparations to step back
6) in two years, you then have some options: promote your successor to non-shareholding president, and step back yourself, either to simply board member , or chairman, contribute a little of your time to the company to collect a salary, plus dividends. OR, sell the entire company.

Without doing some of this prep work, you will stay in a limbo of sorts, and again in my view, will not be able to really retire comfortably with the kind of savings you say you will have. You will also put the livelihoods of the 10-12 employees you have in jeopardy, as without you the company will likely go belly up. As you are an s-corp, you will also likely have some personal liabilities associated with a "belly-up" situation as well (check with your lawyer), that would further jeopardize your intended retirement.

The source of my suggestions are my own experience, having acquired more than 15 companies for my megacorp over the years, and turning away hundreds (who like yours, needed succession plans and structure to really make them work) followed by 13 years as divisional CEO of said megacorp.

In a nutshell, if you shape up the business, the avenue to retirement will be more likely to open up for you. You will need more Botox in the meantime.

Good luck

R

[Meadbh]

Memo to the OP:

You have just gotten some very sound (free) consulting advice from Rambler, who knows what he is talking about. Take the advice.

[Accidental Retiree]

Quote:

Originally Posted by ready yesterday Savings are only at 80,000 right now because I just used 140,000 and paid down my huge mortgage to get a rate half of what I was paying before, on an interest only mortgage. This change is saving me 1000 a month and at last I am paying down principle again. I contribute a 22,500 a year in a 401K (244,000 balance). My goal is to retire in 2 years. I would like to sell one of the rental properties I earn about 1,500.00—2000.00 on average per month on this one- (sometimes as much as 3500.00 as it is a vacation rental )--but the upkeep is close to 1000.00 a month (mortgage, management, taxes, supplies, upkeep and update ...not to mention the stress—it's mostly the stress which I am trying to mimimize). In a good market, if I can sell I may be able to clear 300,000 (actually in a good market 400,000 but I am trying to not be overly optomistic) and either pay down the mortgage or invest that money into something else (input is welcome). It pays for itself but that's not enough when the stress is taken into consideration. If I sell and pay down the mortgage with I hope, another low rate around 3--(i know this must happen soon) , our entire remaining mortgage payment of appx 300,000 could, at least, partially be paid by the rental of the other property that we will keep. It brings in appx 1000—1500 per month and costs appx 800.00 per month in mortgage, management, taxes and supplies. Leaving at least 800 to pay towards a 1500.00 (appx) mortgage payment. Much less stress with this property so we will keep it and use it part of the year in our ER I like having cash on hand, but my financial advisor likes 6 months in my hand and the rest in stocks. My savings account of course, pays next to nothing in interest. I use 1500.00 a month from the rentals to pay half of that. We have a 500 a month HOA, my home is worth about 900,000.00 and I have no desire to sell it. I have lived here 20 years and pay next to nothing in taxes thanks to Californias prop 13. If we downsized to something half the price this home is worth we would pay twice what we pay now in taxes if we stay in California, which is where we want to stay. I bought my house for 195,000 and my property taxes remain low.

Since you want to RE, here are some thoughts about your real estate:

You bought your home 20 years ago for $195k, dumped $140k to paying it down, could put another $300k into it, and still have $300k owing on it. If I interpret the above info correctly, the home you live in is pretty heavily mortgaged.

I wonder whether you have considered also selling that 2nd out-of-state rental property so that you can pay off (?) the mortgage on the house you live in?

You live in California. When you're retired, just about every day is a vacation. Or so I have found.

As one esteemed forum member wrote in another thread, when you like the place you live and you're content, it's less important to get away.

If you need to go to that out-of-state location, then rent a place. Even if it's Hawaii!

[rodi]

Quote:

Originally Posted by Accidental Retiree Since you want to RE, here are some thoughts about your real estate: You bought your home 20 years ago for $195k, dumped $140k to paying it down, could put another $300k into it, and still have $300k owing on it. If I interpret the above info correctly, the home you live in is pretty heavily mortgaged.

I agree. It sounds like there's been a lot of equity extraction. So that has also added to the spending over the last 20 years.

I'll assume the refi that required $140k input, was to get you under Jumbo limits. That means your current mortgage is $417k or slightly less.

Since it's 20 years old - I'll hope you don't have Mello Roos on top of the HOA.
That's another budget killer.

Rambler gave you some great advise on how to deal with the corporate issues. But if you're serious about retirement, with your current assets, you'll need to stem the spending and pay down the debt.

[ready yesterday]

Whew what a wake up call. And a lot of info.
I am going to have to digest, and of course it would take me all day to answer all of the questions. I did end up calling in with 'the flu' today.
About the house--yes it was refinanced twice to add two properties on to it, and once years ago to take advantage of a lower rate. Does anyone remember when a home loan was 19%? (1989) or 8 (1993) Or 12% wtih 5% down(1995) and that was the status quo? so the high morgage 620,000 carries all three properties at bit over 3%. Half of mortage is paid by rental cash, so out of pocket is not very high.
1500, my paycheck 1500 from rentals. (all figures are appx)
The home I live in is worth about 900,000, one rental is worth about 425,000-450,000 an the other somewhere between 300,000 and 400,000. So a 3000.00 payment on that much real estate does not seem like much to me. The maintenace issues, payemnts and stress is what I am tired of. I could sell both and have zero mortgage, but I like one of the properties very much, enough to want to ER to at least part of the year.

My partners get close to 100,000 salary and I get close to140,000 salary. Plus distribution , which is equal.
Someone said that I should renegotiate in two years. That is what I will do as I am locked nto what I have now (and that was one hell of a three weeks to negotiate with my partners over this increase in salary a year and a half ago). they were determined to keep ALL of us at the same lower salary and keep our distiburions high.. I did threaten to walk, but I did not want to do that. I knew i was not ready financially and as someone over 50 wtih a very specific skill set and not much more, I doubted that I would find other work in my field.
A lawyer would represent only me in this matter. something I don't look forward to for one second. Just fnding the correct paper work is daunting.
making someone a new CEO would not solve my problem in the end, as CEO is simpley a title that came with my job. It won't solve the 'skill' that is needed and that I provide
I am sorry that I cannot be specific in wha my business does or provides. there are few companies that do what we do,and a google search, while we dont come up first, we do come up fairlly soon, and now that i have outed my partners and the way that I see them, I am uncomfortable saying much more. Who knows, they could be planning an ER too and end up right here.

It was not long ago, in the broke years, that both my husband and I lived on a combined income of 60,000 dollars, in almost the exact same circumstances. The only big difference is now our house is no longer falling apart, and I drive a better car and spend more frivilous cash.

Now iI will go back in depth and weigh my options. I put a LOT on this table here and did not think i would get this much advice. It's helped me quite a bit (and only one person told me to suck it up o) )

As an emloyee it was always easy to ask for a raise, but as a business owners who started a company with friends, well, the circumstances and emotional aspects are QUITE different. I don't recommend it without the iron clad contract and all the other things I was warned to do, and ignored. "but these are my FRIENDS" i said over and over and over.

I have made much more money as an owner than if i would have remained an employee somewhere, so for that I am thankful. but the stress seems to be unlimited. thanks for the input. i better get to work on figuring out work.

[Milton]

Quote:

Originally Posted by jclarksnakes If you are as important to the business as you say you are then you have enormous leverage and should be able to use it to make your partners do their share and give you a break. Methinks you actually enjoy the situation you are in.

+1. Either that or this entire thread is a troll.

If the o/p is in fact the outside face and active manager of the company, it doesn't seem plausible that she would tolerate being pushed around by absentee silent partners.

I also don't understand how a person with a relatively high income would have such low savings. Or how the o/p can confirm that the business is a C-corp and then a couple of posts later say that it is an S-corp: it can't be both.

If the o/p is on the level, I suggest that she review the corporate documents to see if they include a shotgun clause. The latter would allow her to buy out her partners, or trigger a buyout at that same price. Personally I suspect that the value of the business is quite low, as it seems to be little more than a personal services business operated by the o/p, with little or no significant goodwill or hard assets.

[ready yesterday]

Ok if you kill this thread as a troll, have at it. Give me about 10 minutes. I am trying almost saved all of helpful info I need from thiose who gave it.
My savings are low because I poured about 100,000 into my house over the last three 140,000 to pay down a mortgage.....but i guess you missed that. Maybe you also missed that a few years ago I did not make much money at all.

I also pulled out my tax docs in the middle of the night so see we were an s corp and not a c corp..did you note the hard gulp of embarrassment?..I even alluded to the fact that I could be wrong earlier in thentread. I have also admitted that I suck at business. And last night I started looking at the difference between a c corp and as s corp. I don't handle the business....and I am sure I am not alone in the world in making mistakes along the way. I don't know whatever else I can offer.
If the mods was to pull this I am fine with it. Although there may be others like me, who could benefit. I have found nothing online like this and maybe it would help other in the same sort of position, starting a small company with friends or relatives, that went sour.

[REWahoo]

I'm relatively sure Milton has no moderator function on his keyboard and lacks the ability to kill this thread...

[Milton]

I never suggested that the thread be locked, let alone removed. Maybe it is a troll, maybe not; but I don't see anything offensive or otherwise objectionable here.

A couple more thoughts:

Quote:

Originally Posted by ready yesterday Early Retirees inspire me and I thought I could be one years ago, until-a family illness took most of my would be inheritance.

If I am reading this correctly, you were counting on an inheritance to fund your retirement. That is a dream, not a plan.

Quote:

Originally Posted by ready yesterday Even in my own company, my own partners who outnumber me have shot down any thoughts of more than 2 weeks vacation a year. It would not be a “good example” for our employees, who also max out at 2.

Two weeks annual vacation is fine for junior employees, but not for those with a few years seniority. The example your partners want to promote is consistent with a sweatshop image. Do you believe that helps the business to attract and retain efficient, creative, hardworking employees? If not, as the CEO you should change the policy immediately.

[Meadbh]

Quote:

Originally Posted by ready yesterday I don't handle the business.....

......and therein lies the problem.