Your Partnering Pre-nup!

A Partnership whether Business or Marital needs a Pre-nup!

It’s like a good marriage, having a pre-nuptial agreement only makes the relationship better. It simply lays out what “is” going to happen when it all comes apart. No one is wondering what will happen and it makes each partner feel like there is sincere motivation to be in the relationship. Over the years of Partnering with too many people you get to the point where you can judge “character” from 100 feet away, but when you are beginning, or you are about to enter your first partnership, it can be difficult to know who to choose. So I have come up with 10 quick questions to get the ball rolling with a partner.

1. What will your role in the business be, and what do you expect mine to be?

   The co-CEO game can be difficult, so consider putting one person in charge.

2. How will we split up ownership, how will we divide profits and losses, and how will we each be paid?

   Some experts suggest avoiding a 50-50 ownership split. But if you are equal partners, be careful about giving ownership to an employee–it effectively gives the employee the swing vote in any partners’ dispute.

3. How are we going to make decisions?

   Are we going to rationally discuss it or are we going to fight it out?

1. What are your values?

   Yes, it sounds touchy-feely, but there are important issues to be discussed: Will you outsource? Will you employ illegal immigrants?

2. How do you like to communicate?

   Do we talk in person? Do you chicken out and only email me when you know it will lead to a fight? Do we have regular meeting together?

1. Are you against a “vesting” period for your ownership?

   Typically this is smart if you are putting in the money and someone else is doing the work!

1. What’s your spending style–and what’s your credit rating?

   Remember, lenders are likely to check the credit history of both business partners.

2. Where do you want this business to be in five, 10, and 20 years?

   Make sure you’re aligned on growth plans (including hiring, regional expansion, and so forth) and possible exit strategies.

3. Can I have references?

   You have to know the partner’s personality and business reputation. Check with vendors, check with Google, meet the spouse, meet the family, and meet the friends. Go on non-business outings. In other words, date before you commit.

4. Now, can you sign this buy-sell agreement?

   Sleep on it. Give it a chance to finalize in your mind then if you still want to do it, go ahead.