Home – New Forums Other discussions New Business – loan for a car?

  • This topic is empty.
Viewing 12 posts - 1 through 12 (of 12 total)
  • Author
    Posts
  • #976171
    Sals a newbie
    Member
    • Total posts: 4
    Up
    0
    ::

    Hi everyone!

    Thank you in advance for any advice you can give on this matter.
    Here is the situation we have on our hands…

    We’re a new business in Australia with a product we haven’t launched yet, have no sales, though very good feedback from anyone we’ve spoken to about our products.

    We are in a 50/50 partnership where one partner has agreed to finance the operation. We have a partnership agreement and have created a company and trust bank accounts.

    My business partner, who is doing the financing has decided to get a loan through the business for a $40,000 vehicle. My belief is this is starting out too big, and have suggested she buy a personal vehicle and put the expenses for business travel through the business.

    Can anyone give advice on whether buying a vehicle before launch is a good idea?

    I appreciate any help you can give on this matter!!!

    SR

    #1079256
    Robert Gerrish
    Member
    • Total posts: 1,274
    Up
    0
    ::

    Welcome to the forums SR, we have a good selection of members well placed to advise on this question, I look forward to following the responses!

    Robert and the FS Crew

    #1079257
    MyGreatIdea
    Member
    • Total posts: 2,278
    Up
    0
    ::

    I can’t see how your partner can justify such a purchase at this early stage of your business.

    Your suggestion to claim business use against her own car makes much more sense. Is she being just a little too greedy? Do you have an agreement in place as to how spending decisions are made?

    Wendy :)

    #1079258
    David@Verve Recruitment
    Member
    • Total posts: 247
    Up
    0
    ::

    I’m no accountant, but I’m pretty sure you have to make money before you spend it.

    Buy a Ferrari if you’re that confident that things will work out, or are prepared to go bankrupt, but if you’d prefer to do things sensibly buy a modest car within a modest budget. But I’d be thinking providing a car allowance would be the way to go.

    I think i’ve been told that all managing directors can get a car/car allowance without having to provide a log book – it’s assumed by the ATO that an M.D. will require a vehicle for business purposes. Can anyone confirm?

    #1079259
    Sals a newbie
    Member
    • Total posts: 4
    Up
    0
    ::

    We definitely have an agreement in place. Each spending decision has to be agreed to by both of us.

    The problem with this situation is, although we’re in an equal partnership – as my business partner is loaning the business money to get started, it’s feeling like this is her money and instead of equal decisions, she gets to make all the financial decisions.

    I’m very adamant that the business does not need to purchase a $40,000 new car before we’ve paid for our initial stock, shipping of product, catalogues or even business cards.

    How do I get past this “her money” problem?

    SR

    #1079260
    MyGreatIdea
    Member
    • Total posts: 2,278
    Up
    0
    ::
    Sals a newbie, post: 99906 wrote:
    We definitely have an agreement in place. Each spending decision has to be agreed to by both of us.

    The problem with this situation is, although we’re in an equal partnership – as my business partner is loaning the business money to get started, it’s feeling like this is her money and instead of equal decisions, she gets to make all the financial decisions.

    I’m very adamant that the business does not need to purchase a $40,000 new car before we’ve paid for our initial stock, shipping of product, catalogues or even business cards.

    How do I get past this “her money” problem?

    SR

    She is only “loaning” her money to the business, not buying more that her share of it. And you need to start now as you mean to continue – don’t give in on this one !!

    I think you need to have an official meeting. Make it somewhere neutral and run it as a business meeting. Take minutes. Have an independent person there if needed. Discuss the issue. Then don’t agree to the purchase. That’s not to say you’re taking control, you’re simply enforcing the agreement you already have that says both parties must agree to any spending.

    It will go either one of two ways. She doesn’t like your decision and either goes ahead with the purchase anyway (in which case you can take action) or wants to pull out of the business. Either of these two is probably a good thing to find out now, rather than later.

    Or she will understand your reasons and accept them. Business will continue and you will be successful.

    Let us know how you go.

    Wendy :)

    #1079261
    Sals a newbie
    Member
    • Total posts: 4
    Up
    0
    ::

    Thank you everyone!

    I’ll let you know how it all turns out.

    SR

    #1079262
    dextereugenio
    Member
    • Total posts: 536
    Up
    0
    ::

    one of my biggest business mistakes is to purchase a new car far too early.

    never again i tell you.

    dont make the same mistake.

    #1079263
    Phillip P
    Member
    • Total posts: 254
    Up
    0
    ::
    Sals a newbie, post: 99796 wrote:
    My business partner, who is doing the financing has decided to get a loan through the business for a $40,000 vehicle. My belief is this is starting out too big, and have suggested she buy a personal vehicle and put the expenses for business travel through the business.

    Can anyone give advice on whether buying a vehicle before launch is a good idea?

    I appreciate any help you can give on this matter!!!

    SR

    My advice… get out while you can…

    Sorry for being so straight forward but just because she has some money doesnt make her any wiser to business which WILL affect you in the not to distant future.

    This is a sign…

    #1079264
    Sals a newbie
    Member
    • Total posts: 4
    Up
    0
    ::

    I’m beginning to think I might need to contact a mediator at this early stage of the business. I’m a bit shocked that I’ve been hung up on three times this afternoon.

    She’s even said that she believes she has more ownership of the business because she has used her money to fund the startup. That she will be making all financial decisions because it is her money.

    With an agreement in place that states this is not the case, I know I’m on the right side of this discussion. I have asked her to be less emotional and make business decisions and have business discussions instead of overly emotional outbursts.

    Can anyone refer me to a small business mediator?

    #1079265
    AgentMail
    Member
    • Total posts: 1,741
    Up
    0
    ::

    Hi Sals,

    Just stop and think before you take that next step – once you involve a mediator, there is no turning back.

    There was obviously a reason the two of you decided to go into business together, some shared passion or something. You need to sit down and discuss this.

    Try and see if you can meet on mutual ground, a cafe or something. Have a chat about your concerns. Explain that a new vehicle (in your opinion) puts the business in unecessary debt at this early stage. Be factual, be unemotional. Explain what direction you would like to see the business taking, and be honest about the future if you cannot come to an agreement.

    You need to try and salvage this quickly, and see if you can get this back on track before it is too late.

    #1079266
    David@Verve Recruitment
    Member
    • Total posts: 247
    Up
    0
    ::
    Sals a newbie, post: 99946 wrote:
    I’m beginning to think I might need to contact a mediator at this early stage of the business. I’m a bit shocked that I’ve been hung up on three times this afternoon.

    Wow. It’s hit the fan, eh. Still, best that it’s happened now.

    OK I have a little story which may help. I once knew this guy who became a very close friend, and then we started a business together. After a few months I began to suspect, then it became clear that he was a pathological liar. A mental condition. He had lied to me about most aspects of his life within minutes of meeting him. He had lied to everyone else he was in contact with as well. All of a sudden I realised that I was in business with a crook.

    I contacted a lawyer and you couldn’t believe how relieved I was when I was told that as the business had not been active, as there were no financial transactions, it was all in the planning stages, that i was able to nullify my part of the business. Which is what I did. There was a form to fill out, and I had to post an advert in a newspaper.

    Thankfully with that he became history.

    Your partner may not be a pathological liar, but they seem to have some issues when they refuse to see sense and come out with the threats before things have even started.

    My guess is that you’re best off dissolving what you have as quick as you can. Maybe even selling her the business, and you can go off and do it with another partner or on your own. Either way, you’re best off out of this one. Count your blessings that it’s gone wonky now and not down the track.

Viewing 12 posts - 1 through 12 (of 12 total)
  • You must be logged in to reply to this topic.