Sure, everything seems rosy now. But when you and your co-founder no longer see eye-to-eye, you'll be glad you did the paperwork early on.
Entrepreneurship is not for the faint of heart. Many of us, understandably, want a partner or co-founder at our side. But after 20 years, four companies, and six partners, I’ve learned that partnering doesn’t solve everything, and often introduces its own difficulties. Here are six rules that will help you set the groundwork for a great partnership – and a decent breakup, should you need one.
Imagine “The End”
Don’t agree to partner with anyone, or take on a partner, until you are clear in your own mind and on paper about how you would choose to end your business. The partnership agreement is going to be the equivalent of your business pre-nup, and now is the time to think about what happens in the event of a separation or divorce. Your buy-sell and partnership agreements should clearly spell out every potential scenario.
Just having this conversation will reveal more about your potential partner then you could ever imagine—or maybe more than you want to know. The best partnerships are built around clear and specific roles, operational guidelines and legal contracts.
Tough Talk, Not Love Talk
At the beginning, it’s great to be in love with your partner. They will undoubtedly be the person you spend the most time with, share secrets with and grow your business with -- unless you grow to hate them. Have tough conversations before committing, and explore every possible relationship and business outcome you can think of: What if you work harder? What if they work smarter? What if they bring in the money? What if it was your idea? What if he/she wants to leave? What if the investors want only one of you to stay? Good partnerships set the foundation for a better break-up with honest, open communication. No scenario is too uncomfortable to consider. Anything can happen, and it probably will.
Who’s The Boss?
Don’t gloss over your job descriptions. Think of the contingencies: you swap roles, one of you steps away, or a family matter takes all your attention. Can your buy-sell agreement handle all of these?
Review your job descriptions every six months, and keep them updated. Working on your partnership is part of your job. Make it part of your mission statement.
The Paper Trail
Every partnership should be built document at a time. Don’t skip over any details, even if they seem like a pain in the neck at the time. And put it all in writing, especially your concerns. Keep a paper trail. Print everything important and relevant to the pulse of your relationship and put these documents in a file. You might not like to think about it now, but when you most need this information, you may not have have access to your computer or company email.
If you and your partner get into a dispute, your company’s attorney can’t take sides and shouldn’t. So when things get tense, your partner’s attorney will be sitting across the table. You need your own personal attorney. You need someone who not only understands how to build businesses, but has experience closing them down.
When you meet with your attorney, skip the storytelling – you’re paying by the hour. Just get clear on your legal standing, and what you can and can’t do to get your partnership on track or end it.
The Partnership Advisory Board
While the ultimate decision about who to take on as a partner is yours alone, you still need a personal set of advisors. These can be your attorney, entrepreneurs who have been through partnerships themselves, or a life partner – who probably knows more about your partnership than anyone else. These are the folks who will watch your back and can help you decide whether to love, mediate, or leave your partnership.
Ultimately, you are accountable for everything about your business, even picking your partner. So choose wisely and prepare that pre-nup.
IMAGE: image courtesy shutterstock.com at http://www.shutterstock.com/gallery-3391p1.html
LAURA MCCANN RAMSEY: Laura McCann is a serial entrepreneur in the fashion and technology space, having launched Fashion Express Worldwide, Zweave and WYSWG LLC. She is currently senior vice president, product management, for Stylesight, the leading online trend service. She is a Springboard Enterprises alumna and a contributor to "Been There, Run That."