Joyfullyblessed Posted August 7, 2012 Share Posted August 7, 2012 Hello All, My husband was laid off from his job of 22 years just a touch over a month ago. It was a corporate job that he didn't really enjoy, but it helped pay the bills every month. Anyway, he did receive a decent severance package and is actively looking for another job. A situation came up yesterday that is interesting & I would love to hear some opinions as to what others would do if this happened upon them. Here is the gist of what happened... An old friend contacted my husband because he had seen him on LinkedIn. Anyway, this friend had worked over 20 years for a big company when he decided that it was time for him to go out on his own. He was making a three figure salary, but decided to step out in faith to begin his own business. He started his business in January this year and projects that by the end of this year the company will make a nice three figure amount. Things have been going very well for him. He asked my husband to come in and talk with him yesterday about working with him. Due to the fact that this business is so new, he can't initially offer my husband as much as he had been making before salary wise, but the amount is not just terrible and my husband would receive monthly bonuses too. My husband would be provided a laptop also, any traveling that is not local would be completely covered, eventually be able to work from home and if he did well enough... would be provided a company car as soon as January 2013. Plus, this guy is saying that my husband could own a percentage of the company if hubby proves himself to be a good, solid worker. Downsides are that this is a very new company, very small. There would be no benefits such as health insurance, 401K, etc... These things would possibly come later once the business gets bigger, but not right now. However, there could be some great things come of this IF it works out well. And as I mentioned above, this guy is doing really, REALLY well with this business so far. Hubby is kind of excited about the idea because it would get him into something new and out of the corporate crud he has dealt with for years and years. However, he is cautious because he wants to do what is best for not only him, but for our family as well. His friend said that he could join him a few times in the very near future just to get a good idea of what the job would involve. This would give hubby a chance to see if he would even like this type of job or not while still receiving pay from his old job. If he didn't like it, well, not a problem. Hubby is still going to put resume's out to other companies as well, but he is just wondering if he should give this a shot while he has this opportunity. Anyway, if you have read this far, please let me know what you would do if you were in this situation? We are going back and forth over what to do. Seems like a cool opportunity, but one to approach cautiously. Thanks and have a wonderful day! :) Quote Link to comment Share on other sites More sharing options...
Chris in VA Posted August 7, 2012 Share Posted August 7, 2012 I'd proceed cautiously and gather a lot of information before making a decision. Is your husband gifted in the area of expertise that this new job would require? It sounds like sales, from your post--is it commission only? Could he do it for a short while like a trial run, or does it require some sort of investment that he'd be out if it didn't work out? Is this person totally trustworthy? I'd do a backround check, honestly, if they've been out of touch. I'd also check tax records of some sort, just to make sure things are on the up and up with the company (I don't know how you do that, I'm just saying poke around). Quote Link to comment Share on other sites More sharing options...
besroma Posted August 7, 2012 Share Posted August 7, 2012 This sounds like a wonderful opportunity to me, especially since he does not enjoy the corporate world (assuming he trusts this person). Even if it did not work out, he could always go back to the corporate world. Glad to hear he got a severance package. Quote Link to comment Share on other sites More sharing options...
freerange Posted August 7, 2012 Share Posted August 7, 2012 How exciting! If you have enough of a financial cushion that you can cope with a lower income for a short while, covering any additional expenses like paying for your own insurance, then why not give it a go? If it doesn't work out to be what your DH wants to do, he can always go back to the corporate world. Quote Link to comment Share on other sites More sharing options...
Kathryn Posted August 7, 2012 Share Posted August 7, 2012 How exciting! If you have enough of a financial cushion that you can cope with a lower income for a short while, covering any additional expenses like paying for your own insurance, then why not give it a go? If it doesn't work out to be what your DH wants to do, he can always go back to the corporate world. :iagree: I'd check into the guy and see how he gets along in a trial run, but it sounds like a good opportunity. Quote Link to comment Share on other sites More sharing options...
Dinsfamily Posted August 7, 2012 Share Posted August 7, 2012 My dh did a similar thing 5yos ago. He left his job with a top consulting company to join a start up healthcare company. Now, it was farther along than the start up you described. Even so, we've had some scary moments. I now understand how many well-run companies with good business models can still fail. Dh was working around the clock the first couple of years because the company didn't have enough money to hire enough management or admin. That was tough and he had to evaluate what was important to him. It wasn't until this year that he finally got a decent raise and equity in the company. He still isn't paid anywhere close to what he'd be paid in the mainstream corporate world, but our lifestyle and his work environment (which has improved greatly with some additional hiring) are worth it. Plus, we were able to move to Tx from San Francisco where it is cheaper to live. The biggest comfort for me was that if the company failed, my dh would have no trouble finding another job or even going back to his old company immediately. There were a few times when we were close to jumping ship. No healthcare would have been a no go for me...I think. I did look into individual insurance when we first moved since the company's plan was terrible for a family with kids. Thankfully, dh hired an HR person and she fixed it immediately a month after he took the job. So...If I were you, I'd imagine the worst possible situation: that the business fails in a year or two. Would it devastate you financially? Would it put you in about the same position as now so no loss besides some retirement? Can you live with those consequences? I think some husbands (like mine) can be gung ho about the possible payout and disregard the risk. That's why they have more cautious wives to remind them that dc need to go to the doctor and dentist once in a while.:001_smile:. Quote Link to comment Share on other sites More sharing options...
Paintedlady Posted August 7, 2012 Share Posted August 7, 2012 IF the other guy is trustworthy and completely on the up and up, I think it's worth looking into. Do not invest any money under any circumstances--that would be a huge red flag! My husband has a 3 year old start-up business and asked a partner in this year under similar circumstances as your dh's friend, but both of them still work another job (for both the money and benefits) and there is no promise of a company car. Or any big promises really. Just that they'll both work really hard to continue to grow the business. I would be wary of big promises like bonuses and a car from such a young business. That seems very unlikely. I guess all in all it's worth checking out but I'd tread very carefully. Quote Link to comment Share on other sites More sharing options...
justasque Posted August 7, 2012 Share Posted August 7, 2012 Not trying to be negative - but there are a few questions I'd ask, to be sure you are going in with eyes wide open. projects that by the end of this year the company will make a nice three figure amount. In profits? Or gross income? Would profits be put back in the company, or put into salaries/bonuses? Honestly, I'd want to see the numbers. my husband would receive monthly bonuses too. I'd want this firmer. Under what conditions, and how would be amount be figured? and if he did well enough... would be provided a company car as soon as January 2013. Presumably also if the company as a whole did well enough. Not just if your dh worked hard enough, if you see what I mean. Just to be clear. Plus, this guy is saying that my husband could own a percentage of the company if hubby proves himself to be a good, solid worker. This concerns me, as it's a lot to promise in this situation. Under what circumstances? How would that happen, exactly? How much of the company? Does he mean stock options, or something more informal? That can go well, or badly, depending on how the company does. Hubby is still going to put resume's out to other companies as well, but he is just wondering if he should give this a shot while he has this opportunity. It can't hurt to dig deeper on this, but I wouldn't stop the resumes yet. Quote Link to comment Share on other sites More sharing options...
BlsdMama Posted August 7, 2012 Share Posted August 7, 2012 I don't think you'd have much to lose... Many companies aren't hiring right now and even with all of his experience, he might find new employment a challenge to find. If he's known the guy for a number of years, has he been above board, ethical, and a good guy? If so, I'd be likely to encourage the jump, especially if he's excited about it. Quote Link to comment Share on other sites More sharing options...
FaithManor Posted August 7, 2012 Share Posted August 7, 2012 Without actually numbers, being allowed to look at the company books, and seeing the offer in legalese, I'd be leery until I had more facts. Business owners can really talk up a good game when the bottom line is very poor. My dad has run into this more than once when other businesses have wanted to buy him out and then offer him a cushy consulting job in their business. Since dad is pretty savvy, he always demands numbers, facts, copies of taxes, debt disclosure, etc. and usually the picture is not quite so rosy. It sounds wonderful, but how things sound may not be how things are. It could be. You just don't have enough information to draw any reasonable conclusions on....sort of like when my sister-in-law got taken in by a dear friend in the real estate business...."OH, quit your job and come work for me. I made $400,000.00 last year and you'll be making six figures in no time too." Uhm.....NO!!!! The business gross vs. net are two very, very different things. Her friend actually made $90,000.00 and most of the agents working for her were only averaging $35,000.00 for the first year or two. SIL quit a $75,000.00 per year job on that lie and then could hardly keep her head above water. Proceed with caution. Due diligence in data collecting. Faith Quote Link to comment Share on other sites More sharing options...
Lisa R. Posted August 7, 2012 Share Posted August 7, 2012 Hello All, Anyway, he did receive a decent severance package and is actively looking for another job. Plus, this guy is saying that my husband could own a percentage of the company if hubby proves himself to be a good, solid worker. Downsides are that this is a very new company, very small. There would be no benefits such as health insurance, 401K, etc... These things would possibly come later once the business gets bigger, but not right now. :) We've been in this situation before and known friends who've also pursued opportunities. 1) If your dh has a severance package, there may not be a better time to take a risk such as this. If you can afford a lower salary for a time, this could be an amazing opportunity. 2) If the owner is saying that your dh could "possibly" own a portion of the company "if"... I'd change this. Your dh needs something in writing that gives him a certain percentage of the company, particularly if he is willing to make this risk and earn a lower-than-expected salary. The owner may promise a percentage at a later date, but people have a way of getting greedy once the money starts pouring in. I'd insist on a percentage as part of the employment contract. This is reasonable since your husband not getting other typical employee benefits. 3) I'd make sure you can afford to get your own health insurance while working this job. That is not a risk I'd be willing to take. Even if this opportunity does not work out long-term, it could be a great learning experience. It's very exciting to see a new company start. But...get your demands in writing. DO NOT rely on promises or verbal guarantees. Quote Link to comment Share on other sites More sharing options...
nono Posted August 7, 2012 Share Posted August 7, 2012 Does the guy heading the start-up only have large company experience? That's my only question. The folks I've seen fail most in these situations are those who always had enough people around them in a large corporation who got all the things done. If he had small-business experience anywhere in his past, he'll likely be able to leverage that knowledge to avoid some of the common pitfalls (as folks upthread have mentioned). Or alternately, if your dh has small business experience in his past, and the guy is great on taking feedback/implementing changes as needed, my first paragraph remarks would also apply. ;) Tell your DH good luck deciding! My dh was laid off a year ago without a good severance. He made enough freelance consulting over the last year to keep our heads above water, and made the decision to start his own small business. We're actually quite happy, even though we have no idea how it'll all turn out. :) Quote Link to comment Share on other sites More sharing options...
Desert Rat Posted August 7, 2012 Share Posted August 7, 2012 How exciting! If you have enough of a financial cushion that you can cope with a lower income for a short while, covering any additional expenses like paying for your own insurance, then why not give it a go? If it doesn't work out to be what your DH wants to do, he can always go back to the corporate world. :iagree: But would caution if this is a friend. If it's an old acquaintance, fine. Friend? My dh would probably save the friendship if he were in the same position. Quote Link to comment Share on other sites More sharing options...
Joyfullyblessed Posted August 7, 2012 Author Share Posted August 7, 2012 Thank you sooo much! You guys have given great advice & suggestions. There is a ton to think about. This is indeed a sales type job involving advertising. It would not be 100% commission. There is a base salary. Also, IF this were to work out, the guy already told my husband that everything would be written up in a legal contract form. Thanks again! :) Quote Link to comment Share on other sites More sharing options...
Joyfullyblessed Posted August 7, 2012 Author Share Posted August 7, 2012 This guy would be considered more of an old acquaintance probably at this point. My husband was friends with him back in high school, but has only spoken to him a handful of times since then. He does seem like a good, trustworthy guy, but I definitely will recommend to my husband to check him out thoroughly first before moving ahead with anything. Thanks! Quote Link to comment Share on other sites More sharing options...
gardenmom5 Posted August 7, 2012 Share Posted August 7, 2012 the business still qualifies as a start up. dh went with a couple after being laid off. both of those failed because the founders were idiots. He finally ended up starting his own small business that is growing. some questions I'd ask are: what's the business plan, what is the market for that niche how do they generate customers, how level headed and self-disciplined is the friend (many entrepenuers have a good idea, but can't budget to grow a business.), what is the proprotion of outlay to revenue, what is the trend what say would your dh have in the running of the business what would his legal liabilities be if things go south get everything in writing - *especially* the part about a percentage of the business, and it needs to be explicit about what that means. that would then give your dh a stake in this business, so while he's foregoing the stability of working for a large corporation, he has the potential to reap the rewards of part-owning his own business. Quote Link to comment Share on other sites More sharing options...
Shellers Posted August 7, 2012 Share Posted August 7, 2012 I don't think you'd have much to lose... Many companies aren't hiring right now and even with all of his experience, he might find new employment a challenge to find. If he's known the guy for a number of years, has he been above board, ethical, and a good guy? If so, I'd be likely to encourage the jump, especially if he's excited about it. :iagree: Quote Link to comment Share on other sites More sharing options...
Brigitte Posted August 7, 2012 Share Posted August 7, 2012 Thank you sooo much! You guys have given great advice & suggestions. There is a ton to think about. This is indeed a sales type job involving advertising. It would not be 100% commission. There is a base salary. Also, IF this were to work out, the guy already told my husband that everything would be written up in a legal contract form. Thanks again! :) It is easier to find a job when you already have a job. So, taking this position might not be a bad thing, even if it doesn't work out long term. Quote Link to comment Share on other sites More sharing options...
SnowWhite Posted August 7, 2012 Share Posted August 7, 2012 My husband is in the position of the start-up employer. My sister-in-law works for him and he has had other employees as well. I'm thrilled with the way this type of employment allows flexibility for our family life and has enabled my husband to grow as a leader and in maturity. I'd say go for it, particularly since it's the best offer he has right now. Quote Link to comment Share on other sites More sharing options...
justasque Posted August 7, 2012 Share Posted August 7, 2012 This guy would be considered more of an old acquaintance probably at this point. My husband was friends with him back in high school, but has only spoken to him a handful of times since then. He does seem like a good, trustworthy guy, but I definitely will recommend to my husband to check him out thoroughly first before moving ahead with anything. Thanks! I would basically interview this guy as if your dh was hiring him, instead of the other way around. What is his past work experience? Why did he leave his previous job(s)? References? (Yes, seriously.) If he has previous start-up experience, how did it go? If not, what gave him the inspiration to do it now? What does he bring to the table in this partnership? What does he expect dh will bring? How will the rest of the needed skills be brought in? How is the company financed? His personal funds, loans, shareholders, investors? What would he expect financially from dh? What is the company's budget for the year? What about long-term? Where is the money coming from? What are the contract lengths - that is, how long are current customers committed? Who are their competitors in this field? What gives them an advantage? Is there a business plan? Dh should read it. And should do so with a very critical eye - what's vague, what's missing, what's overly-optimistic. Again - not trying to be negative AT ALL - this could be a great opportunity. However, you need to be clear on the commitment required, and the risk you are taking on. A good, honest guy will understand, expect, and respect these inquiries. If he does not, then he's not the guy you want to go into business with. Quote Link to comment Share on other sites More sharing options...
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