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4 Questions to Ask Before You Get Hitched in a Business

Guest post by: Marijo McCarthy

Article Overview: At the beginning of 2011, I challenged you to consider the "end game" regarding your business - the point in every business' life when the owners have a decision to make. To stay or not to stay... to expand or not to expand... to sell or not to sell. In other words, which direction to take.

4 Questions to Ask Before You Get Hitched in a Business

At the beginning of 2011, I challenged you to consider the "end game" regarding your business - the point in every business' life when the owners have a decision to make. To stay or not to stay… to expand or not to expand… to sell or not to sell. In other words, which direction to take.

Sometimes, those decisions involve divergent individual choices and that's where the game gets interesting. Indeed, the day you find yourself hesitating to make your views known to your partner is the day you will either:

1. pull out your stockholder agreement and congratulate yourself for having anticipated this day 10 years earlier or,

1. bitterly regret having bypassed that admittedly time-consuming process in the start-up years.

If your answer is "b," it may also be the day that you find yourself sitting in your lawyer's office confessing to the fact that:

• "Yes, I own the business 50/50 with another."

• "No, my partner and I are no longer in agreement about the direction or operation of the business."

• "Yes, my current livelihood and future retirement depends upon the health of the business."

• "Yes, I need help!"

You have reached the point where there are few right or wrong answers. The only definitively wrong answer, in fact, is doing nothing.

And while there are no magic bullets at this point, when two people have started avoiding each other in the office - or, even worse, shouting at each other in front of horrified employees - the only option is to swallow pride, check ego, and disregard perceived slights and hurt feelings. It's time to try to slog through a business divorce at the worst possible time in the business' life.

A much better outcome for all concerned is to anticipate the high probability of an eventual separation by taking some simple steps at the beginning of your business life together, steps which will help avoid a hostile separation when the time comes:

• Ask each other (at least) four basic questions to gauge how much agreement there is at the beginning [this has nothing to do with the product or service you anticipate creating and selling together]:
  
  
  1. What business operating responsibility will each of us assume going forward?
  
  
  
  1. For how long will we commit ourselves before one of us can opt out?
  
  
  
  1. If one of us opts out, will we sell our 50% of the business to the other and how will we finance that to avoid decimating the business' cash flow?
  
  
  
  1. If one of us opts out, will we agree to protect the confidentiality of the business affairs and avoid competing with the business for a reasonable period of time?

• Put the answers down in writing and go your separate ways for a while. Take a week to think long and hard about the similarities and differences between your respective answers. Decide whether you need to compromise and reach agreement. Decide, even, whether you should be partnering with this person for the next 10 or 20 years of your life.

• Come back together and communicate your thoughts to each other. These thoughts may not represent your final decisions at this stage, but it's the process of communicating which is so important. Be honest… if you don't know, say so. If you're not sure, say so. If you feel enthused and passionate about your venture, say so. Don't be afraid of honesty… in the long run, it will stand you in good stead.

It can be done… it must be done if small business owners are going to achieve their goals, grow the business, and in the end part with planning, profit and satisfaction.

If you already have partners in your business, I encourage you to review old agreements and see if they match up with current reality. If you are one of the many without an agreement, start now… before you hit the wall and wish you had taken steps years earlier.

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Article Tags: business divorce, business life, end game, partnership



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