Image by Peggy und Marco Lachmann-Anke from Pixabay

By Michelle van Schouwen

“For better and for worse” really applied to me when, for 20 years, I co-owned an LLC with a business partner. That’s because my partner at work was my husband as well, so when the day was done, I went home to… my business partner. Even though our experience was not the most typical business partnership, it taught me a great deal about how to work successfully with a company partner. (I should note that the partnership ended very sadly, when my husband and partner suffered cardiac arrest and died at 49. That story, here.)

If you are considering taking on a business partner, please proceed with the care this critical decision merits.

-First, decide whether you and your company are well-suited to operate with a business partner onboard. Certainly, it can be advantageous to share decision-making with another knowledgeable person, and to share the day-to-day responsibilities of running the show. Your skills, stamina, and contacts can be complemented by your partner’s. Then again, you lose autonomy and the benefits that can bring. (Decisions may be shared even when you’d prefer to make them alone, your financial and personal privacy is compromised, and the money – and this really matters unless you bring in a lot more – will be shared with one more person.)

-If you do want a partner, and perhaps have a partner in mind, the next and arguably most important decision regards the suitability of your particular, chosen partner. I submit that skills, character, and life goals go hand-in-hand as primary determinants of the future success or failure of your business partnering. Excellent and hopefully complementary business skills matter because you don’t need (as an administrative assistant with whom I once worked unceremoniously put it) “another useless ass in the way.” Character matters, because, similar to a marriage, the person you’re closest to can help or hurt you the most. Life goals matter because if you partner with someone whose vision does not align with your own, you could end up with a business situation, or even a break-up, that you don’t want.

-Let’s say you’re all set with the above. Partnership works for you, check. This is the right partner, check. Next, decide what business structure works best for you (LLC, partnership, corporation, or cooperative, for example). Your attorney and CPA will be able to help with these decisions.

-Do engage with an attorney who specializes in small business law to draw up both the organizational structure and a partnership agreement. Your agreement allows you to anticipate any number of scenarios, including what happens if your partner or you want “out” at any point. (I’ve seen one partner nearly bankrupt the others upon leaving and demanding their share, a share that was not available without harming the core of the company.) Buyout terms should adjust to the health and liquidity of the company, and payment often should take place over time. Your agreement should consider business roles, liability issues, how you get paid, how you handle financial liabilities or contribute capital when needed, and what happens in the event of disputes or the need for business dissolution.

-The partners should get into the weeds to thoroughly define their roles and responsibilities. Who manages what? How big a check can one partner write without consulting with the other (or getting a second signature)? What staff titles or departments report to whom? Who makes hiring or firing decisions? How often do the partners meet to discuss business matters?

-Once you’ve established the guardrails, give each other the space and faith to do the job well. Just as with a key employee, only more so, you need to allow your partner to do what they do well. Try not to contradict or undermine them in front of staff. Keep any disagreements private.

-It’s good practice to put important processes, agreements, and opportunities in writing. It’s always prudent to be able to verify what each of you did or did not actually say.

-If something goes wrong, talk about it right away. If you need dispute resolution, business mediators can work with you to determine the best course of action.

-Express appreciation when it is due. Express empathy when your business partner is struggling. In other words, be flexible, and treat your partner the way you want to be treated.

-But do not tolerate dishonesty, criminality, abuse of power, or other malfeasance that will harm your company and that may well come back to impact you legally. Nip this in the bud, even ending the partnership if that is what is called for.

I immensely enjoyed working with my partner, and not just because he was my husband. His complementary skills, work ethic, energy, business savvy, and unflappable sense of humor made our 20 years as partners in a company go by… in a flash. With the proper planning and a big dose of luck, you may experience the same.

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Michelle van Schouwen is principal of Q5 Analytics, providing advocacy and communications for climate change mitigation and adaptation. See Q5 Analytics.org. For 32 years, Michelle was president of van Schouwen Associates, LLC (vSA), a B2B marketing company. In 2017, van Schouwen Associates was acquired by Six-Point Creative Works, Inc. of Springfield, MA. Michelle is available for speaking engagements on topics including her work on climate crisis mitigation and Florida coastal water issues. She speaks to business and student groups about marketing launches and entrepreneurship and works with start-ups to support their development.