Your agreement should include:
- What you and your partner each want out of the business.
- What each of you will contribute (money, time, equipment, space).
- An exit strategy for each party. Spell out what it would take to buy out the other partner or to dissolve the partnership.
Your written agreement can start with a simple, informal document that you and your partner can exchange, discuss, and tweak until you have reached a final agreement. At that point you may wish to have attorneys review it and advise you on future steps.
- Make sure your roles are clearly defined. Let’s say you and your best friend have decided to start a cookie company. Having skills that complement each other—and a similar work ethic—are key. Who’s doing what? Are you the baker while she’s fronting the money? Who’s going to do the sales calls, publicity, financial management and order handling? Remember: As your business grows, so will your responsibilities. That means you need clarity about the division of labor. I know one promising partnership that ended bitterly because Partner No. 1 thought her contribution was simply a financial investment, whereas Partner No. 2 was working fifteen-hour days to keep the business afloat and expected Partner No. 1 to pitch in. If they’d been clear about their roles upfront, they’d probably still be in business today.
- Solve conflicts amicably. You can’t anticipate every future issue your business will face, so even a written agreement won’t insulate you from potential conflicts. After all, no two people think exactly alike. So when conflicts arise, be open, honest and communicative about your thoughts and feelings. Try to solve the problem amicably before you hire a third party, such as an attorney, to solve it for you.
Talking about all the potential issues before you start a business creates a healthy foundation that is essential for long-term success. It also establishes a framework of trust that will let you focus on the best interests of the business as you both move forward.
