How Business Partnerships Can Be Counterintuitive
By Nina Kaufman, Esq.Life is supposed to be about the journey, not the destination (or so I’m told). Yet, when it comes to starting a business–or a business relationship like with business partners–what’s the best advice I can give?
Begin with the end in mind.
It sounds counterintuitive, doesn’t it? To think about what could be the end, the demise, the failure of a business before it even gets off the ground . . . ? Like death and taxes, no one escapes unscathed. At some point, one or the other of you will leave the partnership–whether it’s in a pine box or otherwise.
That doesn’t stop you, though, for hoping for the best while planning for the worst. As mentioned in my article, ““When Business Partners Part,” here are some of the top issues you’ll want to think about in advance:
- Exit trigger events. What are the reasons someone might want or need to leave the company?
- Buyout price. What will it cost to buy back the departing partner’s interest in the company?
- Penalties. Any “bad behavior” you want to prevent?
- Timing. How long will it take to get paid?
- Intellectual property. What do you get to take with you if you leave by choice?
- Confidentiality and customers. How do you get to take with you if you leave by choice?
Having a plan before these issues arise can save thousands of dollars in time, money and aggravation. So begin with the end in mind. It won’t hurt to go out of sequence.
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