L.E.A.P Think

Have you and your business partners asked each other the hard questions about what will happen if you break up?

Many, many business owners I know have had at least one failed partnership in the past. Relationships are messy. That’s just how the world works.

You’ve probably heard the saying “you don’t know what you don’t know”. That’s true when founders and partners are starting a business and thinking about what their relationship will be. Of course, no one thinks that their relationship will sour. I suspect few people get married thinking ‘we’re going to divorce’. Personally, I’m not a big fan of marital prenup agreements for many reasons; but it’s incredibly important to have a prenup when you’re starting a  business. Generally speaking the rules are codified in a shareholder agreement if you’re a corporation or an operating agreement if you’re an LLC. Everyone has these agreements. But few ‘first time’ business owners know the important questions you need to work out with your co-founders and for some strange reason most attorneys don’t bother to make any attempt to guide or coach people through thinking about the issues. I don’t mean to be cynical but perhaps it’s because attorneys make a heck of a lot more money dealing with the breakup of a partnership once it’s gone bad rather than writing an agreement in the first place.

Either way, most people building their first company don’t know what they don’t know. I can testify from personal experience that not asking the right questions upfront can lead to pain.

I recently ran across this article from On Startup titled “Important Questions Startup Co-Founders Should Ask Each Other” (http://onstartups.com/tabid/3339/bid/99/Important-Questions-Startup-Co-Founders-Should-Ask-Each-Other.aspx). It’s a great article and I encourage you to read it.

Breaking up is always hard to do; but most entrepreneurs will struggle through at least one bad business marriage in their life and it’s always best to work out the hard questions when everyone still loves or at least likes each other.

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