My shareholders are out of control party boys. Help!

Dear Aunty B,

Help! I don’t know how to dig myself out of a hole. I went into a wholesale business with these blokes that used to be clients of mine. When they were clients, we would muck around together being bad boys. Our company is only three years old and profitable after year one and the boys already want to rip the money out of it. They also don’t understand that I run the business and they won’t listen to me as they still view me as one of the boys and now as the number one party wrecker.

I don’t know how to control the situation.

Should I think about selling?
Ben

Dear Ben,

Are you nuts? Every entrepreneur I know has difficult shareholders. Sometimes they are nuts, sometimes they are drunks, sometimes they are greedy, sometimes they fear growth, sometimes they are revenue crazy and sometimes they are just fools. And yes you look back and rue the day you went into business with them. But you have. So here is what you must do.

You build a terrific board. You get the most prestigious grey haired people you can to join the board as independent directors. If you can’t afford their fee, give them some equity.

Not only will these senior business people help you grow the business, they will help you deal with those shareholders. And that may mean paying some of that money out as dividends, but also managing the shareholders’ expectations so they understand you are increasing professionalisation in the business. Above all, don’t sell out now. And if you weaken? Think of starting all over again.

Be smart,
Your Aunty B

To read more Aunty B advice, click here.

Email your questions, problems and issues to auntyb@smartcompany.com.au right now!