Guest post by Jennifer K. Halford, Esq.
I was speaking last week with a business owner who suffered through an ugly dissolution of his business partnership. He and his friend had been in business together for over eighteen years. And they never saw the dissolution of their business or their friendship coming.
People go into business with their friends believing that the friendship will endure. And that is often true when the business is doing well and the bills are getting paid.
But what happens when finances get tight and tensions are raised? What if your friend stops contributing her best efforts towards your business? What happens if you disagree over the future of the business?
You don't have to lose your friend to have a business partner.
You can survive your business and stay friends. You just need to take action now to avoid future problems. Here are five things you must do:
1. Have an honest conversation: Discuss your roles and responsibilities with the business. Make sure everyone's expectations are clear and in writing.
2. Create a written agreement: Put your business agreement in writing. Your partnership agreement or limited liability company operating agreement should set forth a process to resolve disputes. It should also include a strategy for one to peacefully buyout the other in the event one of you wishes to leave.
3. Hire separate attorneys to review your agreement: Your business attorney can review the agreement on behalf of the business. But you and your friend should each hire a different attorney to review the document to make sure you are individually protected and to explain how the agreement affects you.
4. Communicate openly and often, but remember that business is business: Be upfront about issues in the workplace. Address issues early on to avoid their growing into larger disputes. But remember to leave your business issues at the office.
5. Spend time together outside of work: You may now see each other daily at work. But you still need to make time to see each other outside of the office. Do the things you used to do together as friends before you became business partners. It will remind you of the importance of your friendship and help alleviate business tensions.
Jennifer K. Halford is an attorney whose practice focuses on business law and estate planning. She is also a professor at California State University, Chico, where she teaches Entrepreneurial Law.