Part 3 of 3: Splitting Up Your Partnership Before You Do Business

Forming a business partnership is like forming any other relationship. You’ll go through the honeymoon phase, you become comfortable with each other, and then reality sets in. You’ll have spats, you’ll have a million people telling you what you should do, and you’ll have your good times and bad.

It’s difficult not to compare a business partnership to a marriage. In some ways, they’re both very much alike, especially when it comes to dividing up the assets. No one wants to consider they may have to dissolve the partnership, but it happens. Often.

Sorry to be the bringer of gloom and doom, but if you go into a business partnership and expect the relationship to last happily ever after, you’re being terribly naive.

Of course, no one likes to think of splitting up a business. I certainly don’t consider ending our own partnership and neither does James. I tend to be on the superstitious side. For me, the mere mention of bad luck makes me feel like a lightning rod for the Fates. That’s why having a game plan for when plans take a nose dive is important to me – and to anyone in a business partnership.

Asking your business partner to sign an agreement might feel like you’re asking for a pre-nuptial contract. The romantics all say, “A contract? Are you kidding? But I’m your best friend! We don’t need that! Everything will be just fine!” Your soon-to-be business partner might have the same reaction.

Feelings of mistrust, hurt and suspicion are bound to crop up when discussion of a written agreement begins. Separate friendship from business. Partnership agreements are nothing personal; they’re protection for both of you.

Here’s the best part: Once you have your partnership agreements firmly established, you’ll never have to deal with many partnership issues that arise, such as what each person is responsible for and the amount of money each person takes home at the end of the day.

Decide what happens should the business dissolve. How will you divide the money? Who gets the equipment? Will you divide your client list? Will one of you keep the company name? If so, should the other one have the option of a buyout?

If there are ever disagreements or if bad feelings creep into the partnership relationship, the situation could get messy and complicated. When you get it all in writing from the start, you stand a better chance of making a clean and amicable split with very little hassle.

And you may get to keep a friend, too.

[tags]business partnerships, working as a couple, partnership agreements, dissolving a partnership[/tags]