How To Get Out of A Bad Business Partnership
Divorce Business Style
A business partnership, like a marriage, comes with emotional and legal considerations that should really be thought out in advance. However, business owners, like newlyweds, are often blinded by the bright glow of hopes and dreams. No one likes to think "worst case" or if they do they are often referred to as "the negative one." In this age of "The Secret" and all that positive thinking implies, it is especially important that objective thinking be applied to any relationship you enter into on a legal basis.
In business, the 50-50 partnership, obligates you to either buy out a partner or dissolve your business if things aren't working out. When I say, "not working out", this does not only refer to things beyond ones control. It also refers to a partner who is consciously ripping the business off or conducting themselves in an inappropriate or destructive manner. It doesn't matter. Your partner could be robbing you blind and you would still either have to buy them out or dissolve the business. In both cases, it will cost you a lot of money in legal fees and in lost productivity.
Having been through a series of partner dissolutions, my advice to small business owners is as follows:
- If you can do it without a partner, I highly recommend you fly solo. You can always hire people that perform the functions you need to add to your special skills.
- If you really want to work with a partner, do a lot of research on the person before you go into a legal partnership. Know who you are dealing with. Interview them. Interview people that have worked with them.
- If you can own a majority stake instead of 50-50, do that.
- If you enter into a relationship and know that it has gone bad, deal with it quickly. Don't drag these things on. Your business and your mental health (maybe even physical health) will suffer.
- Get a good lawyer. This is not the time to penny pinch.
- Work from a place of forward thinking. Rehashing the past or having an internal debate about who did what, or who is right and who is wrong, is a waste of your time and energy. You can't turn back the clock. You can learn from the past if you let the anger go.
- Splitting with a business partner is not always just business. It can get personal. Be easy on yourself. You'll need time to recover from the process in one way or another.
- Don't rush into any new partnerships or make rash decisions. It's not the time to jump into anything too quickly.