Wednesday, April 16, 2014

Must Read for Business Owners Thinking about having a Business Partner

This Inc. article is spot on for things to consider before forming a partnership or Limited Liability Company (LLC) with business partners.  More often than not, I have seen business partners jump into forming an LLC without thoroughly discussing financing, individual business roles, how challenges will be handled and how profits and losses will be addressed.  

Working out details in advance
can help avoid future struggles!
I would suggest adding a tenth item:  Hire an attorney to prepare the LLC operating agreement.  It is very easy to download a free operating agreement, however crucial details might be overlooked and interpreted differently.  

For example, I had a client that wanted to leave an LLC and had more than one challenge from the former business partner about using a business name.  Said name happened to be the departing business owner's name and long-time individual business name, even though the LLC was named something totally unrelated.

9 Key Things Successful Business Partners Always Do

Are you going into business with the right person? The answer was apparently no in the case of Zipcar's founders. Here's what you can learn from them.
What's more important to a new venture than a great business idea? Finding the right business partners.
I've heard this again and again from successful entrepreneurs, and I've lost count of how many investors tell me that they put their money behind people--as much or more than ideas. Still, so many people go about this the other way around. It's especially sad to hear the stories of founding teams that had truly amazing ideas but who fell apart on a personal level.
Take Zipcar, the rent-by-the-hour car service that was founded in 2000, went public in 2011, and was later acquired by Avis Budget Group for nearly $500 million. You won't find the names of its original founders, Robin Chase and Antje Danielson, anywhere on Zipcar's website now; its About Us page briefly tells the company's story without naming them. The reason? Chase and Danielson left the company years ago. According to a new article in The Verge, the two women haven't even spoken in a decade.
I interviewed Chase for a book I co-authored with Jon Burgstone, so I knew some of Zipcar's story, but The Verge account adds some context. The story drives home the keys to how most successful business partners work together and what wrecks the chemistry between others.
Here are nine proven best practices for business partners: (listed here, read the article for the full post)

1. Have a successful history together before founding a company.

2. Agree on vision.

3. Have the hard talks about money.

4. Decide who the real leader is.

5. Ensure you understand each others' commitment.

6. Have compatible, vital skills.

7. Have compatible styles.

8. Decide how to fill other positions.

9. Have a plan for happily ever after.

Great advice.  Read the full article for the Zipcar story.