Life Cycle Of A Business Partnership

We have been where you are: owners of businesses with partners and all the issues that come with having partners. This real-life personal experience, plus our professional skills and knowledge, has prepared us to help you go through the steps that make up the beginning, middle and end of the life cycle of your partnership.

Each stage has its thrills, challenges and perils. Part of our job as advisers is to educate you on how to be prepared to avoid problems, mitigate risks and maximize opportunities. We care. We want to see you succeed. We encourage you to start with the end in mind so, along the way, you are aware of what’s possible. We want you to know that – should you find yourself in a bad situation – we can help you navigate it and move on. We want you to be confident that we can help you build a solid foundation upon which to build the business of your dreams.

Here’s what you’ll want to know at each stage of the life cycle of your business partnership.

Forming A Partnership

Sure, it’s fun to say to your friend, family member or science project partner: “Let’s start a business with this drawing we created on the back of a napkin.” Partners can provide many resources that one partner may not have individually. But be realistic. A lot rides on the decision to partner. You’ll want to go through the process detailed on the flowchart above and ask the following questions:

• How do you know if that person you’re considering as a business partner is right for you in the long term?
• Is partnering (and giving up equity) really the right choice, and what are the other alternatives? (Maybe you want to “date” before the “wedding.”)
• What goes into a business partnership agreement? What should you know before you talk to your lawyer so you can reduce your costs?
• What if you and your partner bring different amounts of money, time, contacts, expertise, etc., into the business?
• How can you protect yourself so that if you ever have a business breakup, you will still come out a winner?
• How can you make sure your family is protected in case something happens to you?

Growing A Partnership

The more you work together, the more communication becomes important. As you add employees; clients and customers; and more complicated processes, new products and services, there are many more chances for miscommunication – perhaps more drama, more conflict. The business partners model the dynamics of the culture they’re creating. Communication is the key, and that’s based on conversations. Conversational Intelligence tools maintain a high level of communication, and we strongly recommend using them.

We also recommend implementing an annual partnership review. Life happens, and things change. Partners’ interests shift, as do family demands, health priorities and a million other things. An annual partnership review keeps the partnership relevant, which keeps the business growing.

You’ll want to go through the process detailed on the flowchart above and ask the following questions:

• What are the brain-based communication tools from conversational intelligence, and how can they add value to your business and partnership?
• Why has conversational intelligence been identified as one of the five fastest-growing business trends by Inc. magazine?
• Can communication training and coaching really improve customer loyalty, staff productivity, innovation, morale and overall profitability?
• How can you prevent small issues from escalating into major problems?
• How can you keep your partnership healthy and adaptable to current situations using an annual partnership review?
• What questions do the partners ask each other at the annual partnership review?
• If you started your partnership without a partnership agreement, why should you invest in one now?
• If you get one now, can it still protect you, your business and your family? Can it still prevent a lot of future heartache, expense and stress?
• If you and your partner(s) have changed your working arrangements but haven’t changed any of your partnership agreement, what impact could that have on you?
• Is it worth the time and expense to document those changes?

Breaking Up The Partnership

At the end of business life, if it all goes well, the partners look to exit the business using a succession plan, take the cash and each start a new chapter in their lives (see option A, above). That’s what they hoped for in the beginning.

Perhaps their communication skills have allowed them to understand each other’s needs, and they decide to split up amicably (option B). They have five basic choices to end their partnership, with a number of potential variations on each choice. Their communication skills again give them the benefit of arriving at a mutually beneficial choice with little stress or expense.

Perhaps you’ve had a partnership for a while, but it hasn’t been going well lately. You have different ideas about where the business should be going, or your partner is taking money out of the business without your agreement. Or maybe your partner has lost interest and isn’t putting in the effort. Maybe you don’t even talk to each other anymore. In a worst-case scenario, maybe your partner is abusing you, oppressing you, or engaging in fraudulent or illegal activity (option C).

It can be very costly and disruptive to break up a partnership. Perhaps you can invest in conversational intelligence training and coaching to arrive at an amicable breakup if you and your partners are willing to try. It will reduce your costs, time and stress.

Alternatively, we’ve had clients who’ve felt that they were in impossible situations and couldn’t see how they could be resolved. And no one else could help. But we did. We know how to protect your rights to bring about a favorable resolution to your situation. We use creative strategies to break up businesses and settle seemingly intractable disputes in or out of court.

You’ll want to go through the options and process detailed on the flowchart above and ask the following questions:

• Should you end your partnership? What are the risks and rewards? What do you have to consider when making this decision?
• What are the five ways to end a partnership, and which one will be the best alternative in your situation?
• What are some other case studies that are similar to yours?
• You are a minority shareholder. What are your rights?
• Is there any hope that you can find a way out of this seemingly impossible situation?
• How can litigation be a tool for empowerment, rather than something to be feared?
• What’s involved in litigation if you decide to go that route?
• How long will all this take?
• What other professionals might have to be involved? Can your lawyer recommend them?
• What impact will a business breakup have on your business (or former business) and all its employees, vendors, clients and other stakeholders?
• How do you pick up the pieces afterward?

Download our e-book to get many of these answers and to read some actual case scenarios.

Take Control Of Your Partnership’s Life Cycle

At Dunn Lambert, LLC, we will answer your questions, listen to your needs and understand what you’re going through. Then we’ll move into action to find a solution. We will stick with you, negotiate on your behalf – in or out of court – and find the best resolution possible. Learn more about our services. Call us today at 201-957-0874 or reach out online to get started.