BUSINESS PARTNERSHIPS A RISKY MARRIAGE

By Frances McGuckin

As new business start-ups increase, so do the stories of business partnerships that turn into disastrous and devastating divorces. The cause of these business divorces is no different than an ordinary marriage-the parties involved choose the wrong partner for the wrong reasons.

The effects of these business divorces are sad and far-reaching. A potentially viable and successful business is often closed down because partners cannot come to an amiable separation agreement. The eagerness that precipitated the partnership is replaced by hate, revenge, and usually a great financial loss to both partners.

How can these failing business marriages be prevented? The first step is to choose a business partner for the right reasons. There can be many advantages to a partnership. A partner should bring with them knowledge, experience, financial assistance, networking contacts, an extra pair of hands, and a sounding board for problem-solving and brain-storming.

Where possible, choose a partner who has had previous business experience in an area that complements your skills-you don't need two accountants in one business. You must both be able to openly communicate your ideas and problems. As lack of communication is the cause of many marriage failures, the same applies with business partnerships.

Be prepared to agree to disagree as you will spend up to 60 hours a week together. Most marriage partners don't spend this amount of time together and still manage to disagree regularly. Choose a partner that can contribute equally to the financial aspect of the business. Deals such as "I'll put in the time and you put in the money" don't work. In other words, don't "marry" for money.

Lay out each partners' duties in writing in the form of job responsibilities and descriptions. Don't encroach upon each other's duties, yet make time to meet regularly and keep each other informed of what is happening. Don't make any major decisions without the other partner's knowledge.

Most important, spend the money on visiting a good corporate lawyer and have a partnership agreement drawn up. This should include clear buy-out clauses in case of a partnership dissolution. An associate recently commented to me: "Thank goodness I had a partnership agreement, it saved me when it came time to a parting of the ways." Another sadly commented that there was no legal partnership agreement, and has since lost a small fortune on "breaking up".

The few successful partnerships approach the relationship in a professional manner. Choose your business partner as carefully as you would choose your spouse.