Breaking Up is Hard to Do – But Not If You Do These Two Things

Be honest, brutally honest.  This is what’s going to maintain relationships – Lauryn Hill 

It’s Valentine’s Day and love is in the air! This time of the year it’s easy to jump into a new romance so you have that special someone to celebrate V-Day with.  Only to soon find out that he or she wasn’t so special after all.  While it may be somewhat easy to break off a new romance, breaking up your business partnership probably won’t be as simple.  Take these two steps to ensure that you don’t have a breakup or that any breakup is as smooth as possible.

Have A Partnership Agreement!

It is completely surprising to me how many business partners, family members, and friends jump into business together without a clear partnership agreement.  Only to later discover they may be been great friends but terrible business partners.  A good agreement must, at a minimum, address:  Each partners role (things may change over time, but start with a clear understand of who is responsible for what); How decisions will be made (does every single decision, including the type of toner, require a vote by the partnership, maybe – but make that clear); How disagreements will be handled (oh – and you will have disagreements, but they shouldn’t be the death of your awesome business); How profits are divided (evenly may seem like a no brainer to you, but not to the partner who logs a few more hours a week than you in the business); Percentage of ownership for each partner (again, don’t make assumptions, Mike may have put up more money, but Sharon may do more work and expect an equal share); and How to proceed in case one partner dies unexpectedly or just wants to jump ship and back pack across Europe for a year (how will you afford to buy them or their estate out?).

Communication Is King!

The key to any good relationship – business or otherwise – is communication.  Even beyond your partnership agreement, have an honest ongoing conversation about your goals, working styles, and expectations and if necessary why things just aren’t working.  Try to meet regularly just to go over how the working relationship is between the partners.  These conversations may be hard at times, but will make the partnership stronger and any necessary breakup smoother.

I really hope your partnership lasts forever and your business is wildly successful, but beginning being aware of possible roadblocks will make any breakup easier or ensure you and your partner never ever have to call it quits.

If you are starting a business, or currently have one, and need a partnership agreement the SJS Law Firm would love to help!  Also, if you and your partners need a third-party to discuss strategy with or to assist in resolving a business dispute please contact us.   sjsmith@thesjslawfirm.com; 202-505-5309.

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