When you go into business with another person, it's imperative to have a clear understanding of personal goals, the vision for the company and the responsibilities of each party. Neglecting to tackle these details up front can result in serious legal complications in the future.
There are several steps you can take to prevent a future business partnership dispute:
- Create and sign an operating agreement: This outlines many key details, such as job responsibilities, financials and how to resolve potential disagreements. An operating agreement is not required by law, but having one of these in place before you formally launch your company is a good idea.
- Talk about what could go wrong: It's easy to focus on all the good that can come from starting a business together, but you should also touch on worst case scenarios. When you get these out in the open, you're more likely to take steps to avoid trouble down the line.
- Keep an open line of communication: From day one, you and your business partner should understand the benefits of proper communication. Many companies take a turn for the worse when owners fail to regularly communicate. It doesn't matter how you stay on the same page, as long as you're devoted to doing so.
- Create a values agreement: Often overlooked by company founders, a values agreement is based on the commitment you make to one another. This gives you the opportunity to touch on things such as personal philosophies, the type of culture you want to establish and each person's approach to leadership.
Along with the above, there's one last thing you need to remember: Not everyone makes a good business partner. Just because you get along with someone in your personal life doesn't necessarily mean you should go into business together.
Think long and hard about whom you choose as your partner, as going into business with the wrong person almost always leads to some type of dispute.
If you find yourself in the middle of a dispute with your business partner, take these steps:
- Review your operating agreement and values agreement
- Sit down to discuss the problem at hand and potential resolutions
- Remain calm and have respect for the other person's opinion
- Walk away if you need time to think or consider the next steps
If you've tried everything and are unable to resolve your dispute, it may be time to consider your legal rights.