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Throughout my nearly 50 years in business, I have heard many people say, “Don’t have a partner.”
Over the years I have had businesses of my own and others with partners. With the advantage of hindsight, I am able to see what worked, and what didn’t. If you want to know more, read on.
What didn’t work:
- The businesses that I had on my own were not as successful, financially, as those where I had partners.
- Agreements of responsibility that were not drafted by an attorney did not work out well.
What did work:
- Having written and agreed to areas of responsibility, even if not drafted by an attorney helped with disagreements that would come up.
- Meetings on a regular basis to update marketing, cash flow, employee needs, training, goals, and other issues created steady growth.
- Accountability made a difference in the overall success.
- An odd number of partners worked better than an even number during growth.
Some things to consider:
- An “experienced” business attorney can help with dividing ownership based on responsibilities and financing and other issues mentioned above and below.
- During phases of growth or decline partners can have different agendas
- Creating an entity, such as a corporation or LLC, works better than a general partnership for the protection of each partner’s assets
- Will profits be split based on ownership percentage or another method?
- Will there be outside financing or capital calls?
- At what stage should key person insurance be considered or purchased?
- Establish (and fund) a buy-sell agreement if one partner dies, or wants to leave, or leave their share to someone unacceptable as a future partner.
- Include non-compete and non-disparagement clauses.
As I said, I’ve seen what works, and what doesn’t work over my 48-year career. If you’re not ready to speak to an attorney, but want to have a discussion about your situation, feel free to reach out to me.
Your business is usually the most important component in creating Complete Financial Choice®.
To your prosperity,
Rennie
