[bizyman]

Hey all,

My fiance and I decided to start up a business, after a few weeks I decided to get out of the business and let her do it herself. She beleives she can handle it alone and she wants to. I said, have at it.
Now, here are a few problems I can see with her business. First of all, she already has her own business where she works for the state as an independent contractor. She wasnt able to get a business loan on her own so she told the bank she was with that she was expanding her existing business and needed a loan. The bank gave her 15k to expand her business, she then took that money to open up her other business. Could that be fraud? THe business she is opening up is a retail/party store that caters to kids. I just found out that she is now about 40k in debt with the business and it hasnt even opened up. She never made a business plan znc she doesnt have a website.
What do you think her success rate is at this point? I honestly think she is going to fail, and fail soon. But then again, I don't know.

[Aletheides]

Correct me if I'm wrong but you started a business with her and had disagreements about the direction of the business so you just let her do it all herself right?

It seems to me like you hold some negative feelings about it that you need to let go of. "You don't even have a website" "You never made a business plan" and last but not least "I honestly think she's going to fail, and fail soon."

The best thing you can do at this point is be as positive and encouraging as possible. Don't be the nagging spouse that ends up saying "I told you so." If and when she fails.

If she ends up failing then that's life. Everyone fails, but what's important is we learn from our failures and try again tomorrow.

BTW - to answer your question, you can look up failure rates for new businesses...but they're very discouraging. Chances are against her, but this doesn't mean she won't succeed.

[matt_15]

You need to sit down with her, and do a very serious analysis of things. You say "she doesnt even have a website, does this mean yopu think it is appropriate to have a website? The best thing for you to do, is NOT pannick.

[CIsaac]

Well, if she's your fiancee, you guys are both in it together because once you're married her debt may put a strain on things. You obviously have your misgivings so without saying "this is what you should do or I told you so.." you need to get in and make some suggestions. Research websites and show her a format of a sample website, or call a website consultant. Help her with her business plan because this way you see the actual numbers--or help her hire a business consultant who can be forthright.

As for the bank loan...kinda sticky but you probably know the answer yourself. When I was a banker, I was required to check out the business location after xx months (drive by and other methods ) and sift through loan disbursements...you can figure out what that means...

Of course, it depends on the bank. So you guys can't go back, what's done is done just think of strategies moving forward.

[rogercbryan]

Originally Posted by Aletheides

Correct me if I'm wrong but you started a business with her and had disagreements about the direction of the business so you just let her do it all herself right?

It seems to me like you hold some negative feelings about it that you need to let go of. "You don't even have a website" "You never made a business plan" and last but not least "I honestly think she's going to fail, and fail soon."

The best thing you can do at this point is be as positive and encouraging as possible. Don't be the nagging spouse that ends up saying "I told you so." If and when she fails.

If she ends up failing then that's life. Everyone fails, but what's important is we learn from our failures and try again tomorrow.

BTW - to answer your question, you can look up failure rates for new businesses...but they're very discouraging. Chances are against her, but this doesn't mean she won't succeed.

Excellent post!

[rogercbryan]

Originally Posted by matt_15

You need to sit down with her, and do a very serious analysis of things. You say "she doesn't even have a website, does this mean you think it is appropriate to have a website? The best thing for you to do, is NOT panic.

Terrible Post!

Here is why... he has already said that he decided to get out of the business (for what ever reason). When he made that decision he lost the right to get back involved. He needs to judge which is more important; his relationship with his fiancé or the success/failure of the business.

When I started my business in 2006 I was married and my wife was my first employee. Our marriage lasted another six months but our business relationship is still going. I made the decision that the business was more important to me then our marriage was. I do not regret that decision... but this poster may.

If she fails... she fails... we all fail... thats just business. The poster needs to figure out what is most important and then concentrate on that. It is unfair to his fiancé if he is just going to complain from the sidelines. Now everything changes if she ASKS him for help.

The loan is not fraud in the sense that if the bank gave her a business loan and she is using the money for business and she is paying them back there is nothing to worry about. I doubt the loan office wrote in exactly how she was to spend the money. Loan officers often write up loans in creative ways to get them processed at lower interest rates.

Websites are not the most important thing with a brick n mortar operation. In her business segment a successful website could cost 10's of thousands of dollars. Getting the store open and making sales should be the most important thing at this time. I would consider the website a secondary sales outlet and not a primary business focus. I have a website for my company and it amounts to less then 2% of my total business yet it cost me more to get the site up and running then it did to fund the entire business in its first year.

I do agree with the 'don't panic' part of your post. The poster gave up the right to panic when he decided he did not want to be part of the business.

[rogercbryan]

Originally Posted by bizyman

Hey all,

My fiancé and I decided to start up a business, after a few weeks I decided to get out of the business and let her do it herself. She believes she can handle it alone and she wants to. I said, have at it.
Now, here are a few problems I can see with her business. First of all, she already has her own business where she works for the state as an independent contractor. She wasn't able to get a business loan on her own so she told the bank she was with that she was expanding her existing business and needed a loan. The bank gave her 15k to expand her business, she then took that money to open up her other business. Could that be fraud? The business she is opening up is a retail/party store that caters to kids. I just found out that she is now about 40k in debt with the business and it hasn't even opened up. She never made a business plan znc she doesnt have a website.
What do you think her success rate is at this point? I honestly think she is going to fail, and fail soon. But then again, I don't know.

self-fulfilling prophecy: it sounds like you are driving her toward failure with your negativity.... be positive... it sounds like she needs that right now. Don't go to her with complaints unless you have answers or solutions to her problems.

[jasaunders]

I'll echo what some others said. I'll also make a sales pitch, that if she is looking for suppliers of craft supplies for children, feel free to contact me

[ADVERTISE HERE!]

Originally Posted by rogercbryan

The loan is not fraud in the sense that if the bank gave her a business loan and she is using the money for business and she is paying them back there is nothing to worry about. I doubt the loan office wrote in exactly how she was to spend the money. Loan officers often write up loans in creative ways to get them processed at lower interest rates.

I just want to make one comment. The loan likely IS fraud. Roger is correct that if she pays the money back, the bank is unlikely to inquire into the use of the money that was approved for expansion of the other business (rather than the creation of a new business, as she's currently using it), but that doesn't mean that it's not fraud. If she fails to make the payments, she may risk not only compensatory damages (the amount owed to the bank), but punitives as well, since fraud is involved. If I were wanting to have the strongest argument that it was, in fact, just expansion, I would operate under the same legal entity as the independent contract work. However, to do so then opens the independent contract work to the debt obligation of the new business.

As a lesson to all, it's one of those situations where the likelihood of getting caught isn't too high, but if you default, as it appears she might...you can be in big trouble.

[rogercbryan]

Originally Posted by ADVERTISE HERE!

I just want to make one comment. The loan likely IS fraud. Roger is correct that if she pays the money back, the bank is unlikely to inquire into the use of the money that was approved for expansion of the other business (rather than the creation of a new business, as she's currently using it), but that doesn't mean that it's not fraud. If she fails to make the payments, she may risk not only compensatory damages (the amount owed to the bank), but punitives as well, since fraud is involved. If I were wanting to have the strongest argument that it was, in fact, just expansion, I would operate under the same legal entity as the independent contract work. However, to do so then opens the independent contract work to the debt obligation of the new business.

As a lesson to all, it's one of those situations where the likelihood of getting caught isn't too high, but if you default, as it appears she might...you can be in big trouble.

Listen to him... I was speaking my opinion while his post (and he) are coming from a legal back ground...

Thanks for the follow-up on this one!