Every new relationship begins with starry-eyed optimism…
The world is your oyster…the sun is shining…the birds are singing…
But what happens a few months down the road when the bloom is off the rose? Believe me, it will happen and it happens with business relationships as quickly as it does with personal ones. What then?
Before you jump up and say “we do” to any business relationship, the best way to protect your interests is to have an agreement, in writing, that not only protects you and your business associates, but will serve to memorialize the responsibilities, goals and expectations of everyone involved. The idea here is less about enforcement than about documentation and managing expectations.
An added bonus is that the very act of negotiating the agreement will give you a bird’s eye view into the mindset of the people you’re contemplating relying on for your livelihood. There are many potential business partners out there who are wonderful people and possibly even great friends but their belief system is so skewed that they become incredibly difficult to deal with in a close relationship. They will fight you to the figurative death over the tiniest detail simply as a matter of principle.
Is that really someone you want to tie yourself to that closely? Remember – most of us spend as much or more time with our business partners than with our families. Especially those of us who run our own businesses.
When you’re considering a new business relationship, keep these three things in mind:
1. Yes, You DO Need a Written Agreement
It’s really tempting to eschew the written agreement phase, especially if the person you’re going into business with is a friend or family member. But these are exactly the kinds of business relationships that need documentation. It will keep everyone honest and memorialize what you agreed to when the relationship was new.
2. Pay Attention to How Your Potential Partner Handles the Negotation Process
The very act of negotiating an agreement will give you a new perspective on how your potential partner handles conflict, what they value and whether or not your belief systems complement each other. If you see a problem in any of these areas, run, don’t walk, to the nearest exit. You will save yourself a lot of heartache and potential damages in the long run.
3. Hope For the Best But Plan For the Worst
Hope truly does spring eternal and most of us are guilty of a little cock-eyed optimism at the beginning of any relationship. But bear in mind that the agreement you sign at the beginning of a business relationship will help to govern how that relationship ends. While you each may think the other is the greatest thing since a pocket on a shirt when you start your business, by the time one of you is leaving the enterprise you probably won’t be as happy with each other. Make sure that your agreement covers not only how you enter into the relationship but how you leave it and, as much as possible, what comes after as well.
Once you’ve managed to negotiate a strong agreement and everyone knows what to expect and who will do what, the start up phase of your business will proceed much more smoothly. The mere act of documentation will free you from uncertainty and allow you to put your focus where it really belongs – on growing your business.
Call us today at (212) 671-1973 to schedule your comprehensive LIFT™ (legal, insurance, financial and tax) Foundation Audit so we can identify if there are any holes in the foundation of your business, including the agreements you need to have in place before you get started. Normally, this session is $1250, but if you mention this article and we still have room on our calendar this month, we will waive that fee.