33M & 26M
I am looking for outside, unbiased perspectives on a difficult business partner situation. I will lay out the facts as cleanly as possible and genuinely want to hear what others would do and why, including if you think I am wrong.
Context
This is a small but growing service business in construction, drainage, and hardscape work. There are two owners. I own 51 percent. My partner owns 49 percent. We have been in business together for several years.
Contributions
I provided startup capital, equipment purchases and financing, strategic direction, and most of the systems and pricing structure. Recently I also built a broader tech and digital ecosystem that changes the company’s long term direction.
My partner provided sweat equity, field execution, and early employee introductions.
Equity was granted early without vesting, milestones, or formal governance. This was a shared decision and a shared mistake.
The core problem
Over time, the business developed serious margin and cashflow issues. These included unenforced job cost controls, unbilled overages, loose or inconsistent change order practices, and distributions taken under inaccurate margin assumptions.
This resulted in roughly forty thousand dollars of financial drift or liability tied to my partner.
Importantly, many of these failures happened before hard systems were installed. Enforcement came late, after damage had already occurred.
Behavioral pattern over multiple years
We have repeated this cycle several times. There is a reset conversation, followed by short term improvement, followed by regression.
Observed patterns include defensiveness under accountability pressure, feedback being interpreted as micromanagement or personal attack, inconsistent execution at an owner level, and my own pattern of over functioning to fix issues, followed by withdrawal when burned out. That withdrawal exposes gaps but also contributes to the cycle.
I am not assuming any personality change on either side.
Vision shift
Recently, the company has evolved to be more systems driven, with tighter controls and a tech and IP oriented digital ecosystem layered on top of field operations.
This materially changes the company from a field crew business to something more structured and scalable.
My partner did not co create this shift and does not naturally gravitate toward rules heavy or feedback loop driven operations.
Team risk
There are a few key employees who have longer personal history with my partner. There is some risk of employee disengagement or departure depending on how this is handled.
The decision I am facing
The realistic options are:
One, give another structured trial period with hard enforcement for sixty to ninety days.
Two, pursue a staged buyout with milestones.
Three, execute an immediate equity buyout, using a waiver of the roughly forty thousand dollars owed in exchange for his equity, with an optional offer for him to stay on as a salaried employee under clear KPIs.
Four, maintain the status quo, which I believe is unsustainable.
What I am trying to optimize for
Business survivability
Margin integrity
Fairness, meaning not scapegoating someone for system failures
Reducing long term regret
Minimizing employee damage
Avoiding burnout, mine and others
The honest question
At this point, do you try one last enforced trial to prove the issue is truly structural, or do you accept that the partnership itself is incompatible with where the business is going and execute a clean separation now?
If you were in my position, what would you do and why?
What risks do you think I am under weighting or over weighting?
If you have been through something similar, what do you wish you had done sooner?
I am genuinely open to being told I am wrong.
Thanks for reading and for any perspective you are willing to share.