bus. problem need advise

[Michael F]

My best friend, will be my best friend a my wedding in Febuary, came to me this past fall with a prposal. He knew a snowplowing contractor that was getting out he got the route lists, prices adresses ect. Wanted me to solict the work. I ended up getting a substancial amount of work, I knew he wanted to plow for me (he has 3 trucks with plows & drivers). This is where it gets bad, when I asked him how he wanted me to pay him(I assumed I would be paying him as a sub), he said I thought we were going to lump ALL our work together(I have 3 times this amount of work on my own) he has an amount roughly equal to the refered work, and divide it in half. I have 2/3 the total work not including refered work and my name is on 80% of the work. To make matters worse he dosen't have commercial insurance on trucks & is paying his drivers cash(not on his insurance policies). I wish I had never gotten involved in this situation, trying to find a way to tell him I feel like I'm getting #@$% over politly. Don't want to loose his friendship(I don't think he has thought this through from all issues), trying to find good way the approch.Any advise would be appreciated.

 

[GeoffD]

You are in a tough one man.

If you stay with him, you risk being in a law suit. This is based on his insurance status. You will make less money, staying with him.

Even if you work things out, so you end up paying him as a sub, you still risk a law suit because of his insurance status.

I think he asked you to get talk to the people and bid on the jobs, because of your reputation, and proper insurance status. Insurance and Good reputation, is often what gets a job.

However friends are nice to have.

I would sit down with him, and tell him, hey i pay you guys as subs. Or you will get 30% of the income, give hime 30% because he did bring you some new accounts. With out the list and prices he provided, you wouldn't have made out as well. However tell him you are also giving him 30% instead of 20%, because you want him to use the extra money to properly insure his trucks. If you have to maybe even give him 35%, to keep him as a friend.

If he doesn't want to do any of that, and won't get insurance. Tell him that your keeping the 80% of the accounts, and hire some subs or buy another truck. Then take care of all 80% of the accounts yourself. The last thing you want to do, is not sleep at night, because you are waiting for the day the lawsuit comes in, because your friend doesn't have insurance.

I know this all sounds hard. However you have to look out for yourself sometimes, and this one of them.

One might also say, before you venture into something like this, work out who is going to get paid, and how much.

Geoff

 

[SCL]

Mike,

Tough situation,but I think Geoff is right on the button. The other thing you have to keep in mind is that your insurance company can and probably will audit your records to assure that you are keeping things above board with employees and subs alike. They do this with our landscaping biz. You can get around them with some creativity but is it worth it and it makes a pretty iron clad excuse to jump around this deal if you have to. Good Luck

 

[GeoffD]

I have been audited by my insurance co. I was pretty sure I had everything in line, and I did. During the Audit, I will admit I lost some sleep, till I was told I was OK.

Geoff

 

[Snow Pro]

You gotta figure out how to balance your friendship and your business relationship with him. Keep the 80% that's in your name for yourself and tell him he can keep the other 20%. You should stay as far away from that as possible. The ones you got from him in your name should pay him a commission. That amount is negatiable. The most important thing you need to worry about is CYA from potential liability.

 

[SlimJim Z71]

Tell him... First off, he's got to get insurance. You've worked too hard to get where you are to risk losing everything. He should understand that.

-Tim

 

[John Allin]

And if he doesn't understand, after he leaves, bring out your kids and wife - put them in summer clothes, stand them outside for an hour, let them back in, and then ask THEM if you should take the risk....... knowing that the end result could be what they just went through for the past hour.

 

[SCL]

Mr. Allin
What a great concept. I think I might try this with my kids only tell them that this is what will happen if they don't clean their rooms. And Mike remember that you are still responsible for any monetary liability over what your insurance may cover, so don't underinsure either.

 

[Michael F]

I hve 2 million gen liability, plus 1 million umbrella in add to commercial auto for 1 million.