Thursday, November 8, 2012

Business 101: Hold onto your Heart - Part II

So the story continues on, but please keep in mind that all of this is never intended as something to damage anyone else.  Thus, no names will ever be mentioned.  My motivation is to teach from my experiences and warn others to be careful of certain things from the lessons learned.  With that in mind, we'll move on to Part II of the story....

The Proposal...
Of course, after you've heard the incredible story about how a relationship started, the next big question is about the proposal.  Sometimes a proposal can come as a surprise, and other times you might know in advance what is about to happen.  This business relationshop moved along rather quickly.  The first time I walked into the studio, I had already received a couple of phone calls.  In the very first phone call, I was invited to please check out the photographer more closely.  To look at his work, and ask around about his reputation.  And I took heed to that invitation and did ask a few people whom I trusted very much for their advice on the information I had been given to this point.  I received some mixed responses, but even so was told I should hear out what he had to say.  Needless to say, I was a bit anxious as to what this first meeting would actually be about.  Basically I am a fairly optimistic person, but don't take that to mean that I walk into anything with my eyes closed!  I am optimistic, in that I believe things will work out in the best way.  But I am also very careful, and very guarded.  Especially when someone seems a bit over-eager or persistent about something, which was my initial feeling over the preceeding week.  So the afternoon I walked into the studio, I was prepared for just about anything.  Pleasantly, I was met by the two business partners, given a tour of the studio and then brought around to have a seat to hear what they would now have to say to me...exactly what all of this was about.  There is no question that in the last week I had made numerous calls to find out as much as I could about this business, so as not to be caught by any real surprises. It was a pleasant enough meeting, and not long into the conversation they came right to the point with an offer for a partnership.  It was basically very straight-forward.  He's a middle-aged studio photographer who is facing the reality that sooner than later he will need someone to start taking over the business, with the same being true of his partner (all but the photographer part, as she's a framer).  It was explained that he had been checking me out and liked what he'd seen and/or heard, and wanted to have some control over the future of his he was making a proposal to me to take over the business.  He even seemed to have a very well thought out plan, which he presented.  Early in the conversation he stated that, of course, if I was interested and decided to proceed with things, that everything would be handled in an official and legal manner with contracts, because it certainly wouldn't be fair for me to wonder when to expect certain things to happen, and I immediately felt very positive that he was aware of that being important for all sides.  Here is a summary of the proposal: 

•Join the business as a partner from the beginning.
•Continue to operate under my own name, my own creative freedom, and control of my own work.  
•Be paid a "substantial" salary and commission on my sales ("substantial" was the word that was spoken to me, not a word I came up with...although no amount of money was every mentioned) from the beginning, and that salary amount would decrease as my interest in the business increased. 
 •After the first year (or year and a half) the initial percentage of the business would be signed over to me, and this was again where it was mentioned that all of this would be spelled out clearly in legal contracts so that I never had to wonder when these things would happen.  Very clearly I was told that "no money would change hands."  This phrase was stated over and over again when it came to discussions of the terms of the transition.  It would be set up to be automatic.   Then every year after I would receive another percentage.  And he saw the full transition being carried out within a period of around 8 years.  At this time, he also mentioned that he has faced some health issues that may make it harder for him to continue in the capacity necessary in this business, so it may even be necessary to push things a little faster -- and if that was the case, it may be closer to 6 years for the complete transition. 
•They said they would be thrilled for me to take over taking care of website and social networking, and felt that I did an incredible job with that for my own business already.  

Then they asked me if I had any questions.  Honestly, my head was spinning - trying to retain all that had just been presented to me in this proposal.  And my response to having questions was "not at this time... but I'm sure I will as soon as I walk out the door."  At which I was told that I could ask questions at any time.  It was pointed out that the main concern was that the business was continued in a professional manner, and they wanted to handpick who would continue running it.  They said they liked my style, they liked that I was a bit more mature and ran my own business in such a professional manner.  When I asked how long I had to think over this proposal and give them an answer, I was given a timeline of around six weeks or so.  I explained that I was leaving soon for a 2-week beach trip, and then preparing soon after that for a 2-week Italy trip, followed by a trip to Texas for my sons wedding.  All of that within the next 6-8 weeks.  And they were very understanding.  So I left with the encouragement to think it all over, discuss things with my husband, as it would be very important that I had his support on all of this, and to get back with them about meeting again.  

Once I left, the first thing I did was to write everything down that was said.  Make sure all points were straight and clear.  And then questions started flooding my mind.  My husband and I talked about it, and while I had some concerns, we also felt it was a good direction to look into following... so within a couple of days of this initial face-to-face meeting, I sent an email with a list of questions, and to let them know that I would be interested in talking again and seeing about moving to the next step.  Since I would be out of town for a couple of weeks, after which they would be traveling, the soonest we could set up a meeting date was in the early part of September.  In the meantime, they said if I had any questions I could feel free to call or email.  But only one of the questions that I had asked in the email received any kind of response at that time.  The others were not mentioned.  One question I asked was about how they visualized the transition to a partnership of our businesses, pointing out that I did not want to just close down "Photography by DonnaKay" as if I had gone out of business and joined someone else's studio.  I was called by the partner, who told me she understood completely because she had just merged her business earlier in the year as well, and the photographer was very sensitive, never removing her business name - but rather merging them together.  That was a satisfactory answer for the time being.  But no other questions received any kind of answer or mention.  

In early September when my husband and I both went for a meeting at the studio, he knew I had a lot of misgivings about the legitamacy of the offer I had received early the month before... and we both knew that this meeting would help clear up those concerns.  During the month since I had met with them I had taken the time to think about what I loved about having my own business... and what I loved about how it all worked with my life.  Our kids are all grown, and I can invest the time necessary to my photography business, but I can also still control when I take time off to do other things that are important in life. But I did want to see how all of this would play out - and make the best decision for me, for my family and for my business.  So on this late afternoon in September, my husband and I drove over to the studio for our meeting.  Basically, after being taken on the same tour through the studio that I had gone on during my first meeting, we all sat down to talk.  The proposal was made once again with both of us present, and my husband had quite a few questions.  (Let me give you just a little bit of information about my husband: he's is a physician in a private practice here in NC.  He went to medical school, residency and his initial training through the US Army, and has great skill in organization.  So where photography isn't his skill, business organization and memory very much are.)  My husband questioned "no money will ever change hands" and asked if there would be a point that a buyout was expected, and at that time the answer was again reiterated that No, there would be no cash buyout.  There was even a point that I wanted to kick my husband and say "hey, I don't want them to think we're offering to come in with a money buyout!" and later on he told me that he just wanted to make sure that on every level he questioned that to see if they had any angle that they would come back saying there would be a buyout.  And he felt very assured at how they answered the questions at that meeting.  It was also stated that in the contract it would be somehow included to protect both parties that there would be no buyout... and the photographer said that he didn't want either of us to worry about a time coming that whoever had minor interest in the business could come to the other party and say "I've decided I just don't want to do this any longer, so you need to buy out my interest at this time."  And I felt so good that he was concerned for protecting me as well as himself.  He stated very clearly that I was working in the 8 years up to the final transition of ownership.  And then he stated that he would hopefully always be able to work in some capacity.  My husband posed a question about the building, and how that would be handled, and the response was that after the photographer was no longer able to work, a rental situation would be discussed, or I would have the right to choose to move the business after I had controlling interest in the business... but that he felt as long as he was able to work in the business at all it wasn't something to worry about.  Everything that had been proposed the first time was again reiterated, and expounded upon very clearly.  Once we left the meeting 4 hours later my husband and I both felt very good about the answers that had been given, and about the discussion we'd had.  And before we left, I had answered them that, Yes, I would like to proceed.  At this point, it was September 5, and I was to leave for Italy on September 21... so we knew the next couple of weeks was going to be incredibly busy for me.  So it was agreed that we would get together once I returned from my trip to Italy and work on getting all of this done in legal contracts and then underway.  We were in agreement on everything, so it didn't seem that it would be difficult or terribly time consuming.  

Within a couple of days I received a call from the partner, and she said they wanted to announce the partnership during the County Fair since they would have a display there, and they would like to also display some of my work.  She explained they were doing to place an ad about their presence at the fair (which would start in town when I was out of the country) and she wanted to know if I would be okay with them including the announcement about our new partnership.  She also asked me about one of the rooms in the studio as my office, and asked if I could drop by and take a look to see if I would be interested in it.  During this phone conversation I mentioned the contracts, and she said she wasn't really sure that bringing in an attorney to draw up the paperwork was really necessary -- that we were all in agreement on everything, so it should be fine if everything was just written up and we signed it.  For me, that was an immediate concern.  As the next couple of weeks went by, I ended up with several phone calls, visits to the studio, even needing to drop by for a headshot for the ad on the evening before I was leaving for Italy.  I was starting to feel rushed in all of it, and was eager to just be away for a couple of weeks.  I sent several emails asking questions, and emails were never returned with any direct answers to my questions.  (In fact, I very much like having a paper trail, and would usually send an email with questions or even replaying the conversation from a meeting as a confirmation.  Thus, if there was any confusion on my part it would also give them an opportunity to straighten that out.)  But usually if any answer was given, it would be in a phone call.  That was another concern to me.  It didn't take me long to notice that they were careful to not give me answers in writing.  So I was constantly writing down everything that was said to me.  

For the next couple of weeks I was out of the country... my dream trip to Italy.  And it was a much needed break from this impending business deal that was wearing me down.  The biggest blessing in all of it was the group that I was with, which consisted of several Master Photographers who run successful photography businesses, one of which is a long-running business (somewhere around 50 years?!)... and there were other great business people in the group who were able to offer advice and warnings that became very valuable information to me after I was to return home.  But my new friends celebrated this opportunity with me.  During this trip the ad did come out back home, and sadly when my husband showed me the ad during one of our Facetime chats, I found myself going into a panic mode.  The possibility of everything bad that could happen flooded my mind, and I shared all of my fears both with my husband, as well as some of my new friends.  I was reassured that as long as I had everything in a written contract I would have nothing to worry about.  Once again there was that warning of the importance of written contracts!!  If you get nothing else out of the words I write, please understand the importance and necessity of having things written down in legal contract form.  It would be nice if in this world we could just trust everyone and take everyone at their word, but that's just not the way it is with human nature.  

We'll leave it here for this blog, and return with Part III... but I hope you are able to look and see my mistakes right away.  One thing I was told after the 2nd meeting by someone I hold in very high regard when it comes to business: insist on a written contract, and state that until that time you will not proceed with anything else.  It's not about being rude (a real Southern concern very often!) but it is about proper business and self-protection.  I did not do this.  I would talk back and forth, make plans, even agree to their advertising the partnership.  IF I could go back (oh, don't you hate the "what if's" we have to face in life?!) I would have stopped right there.  I don't know if it would have been any different, but if they already knew they didn't mean what they were saying at that time it would have saved my feelings being hurt in the end, and it would have saved me from wasting a lot of time planning for something that just wasn't to be.  I hope you'll return for the next part of the story... and I would love to hear from you on what you've read so far!

Disclaimer:  The purpose of these blogs is simply to share my experience, go over the warning signs that were there along the way and use my experience to keep anyone else from finding themselves in a situation that could end up hurting them.  I had very good advice along this journey, and I have walked away with just some hurt feelings and disappointment in how I was treated.  It could have ended a lot worse!

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