During this time of economic instability it is more important than ever to consider who you are going into business with. It's hard enough getting it right during good times, as around two thirds of business partnerships break up within the first five years. We are certainly seeing more and more businessmen and women falling out with each other at the moment, many feeling that they are keeping the company going single-handedly and upset at having to share hard-earned profit.
It's best to think of a business partnership as very much like a marriage - extremely rewarding and beneficial but a relationship that sadly can easily turn sour and lead to non-stop arguments.
That's not to say you must steer clear of partnerships whilst times are tougher as, with the right choice of partner and the right approach, a business partnership will lead to improved profit, business growth and help strengthen its chances of survival.
However, it is best to be prepared for the rocky patches that every relationship will inevitably go through; especially now as money worries are likely to exacerbate any potential problems.
It's all too easy to get carried away by the excitement of what a new partnership will bring - new skills, new ideas, new investments - and forget to consider how in reality the relationship will work now and in the future.
You would be amazed how many successful businesses have never planned for what to do if an issue arises between the owners. We spend a lot of time dealing with such cases, most of which could have been resolved much earlier and for a lot less money had such considerations already been discussed.
We once had a client that had great affection for his boardroom table. It was a nice table, it was just the right height. It was such a nice table that his business partner also loved it and, between them, they spent years looking after it before they split up. They spent £150,000 and two years arguing about the table in court. The table was worth £5000 - it was indded a nice table, but surely not that nice.
Business break ups are just as painful, just as expensive and often just as petty as divorce. Shareholders and partners often sit in front of me and tell me how they feel let down by the other party and have had their trust abused much like a spouse would with a divorce lawyer.
What is needed, although not the most romantic of notions, is a pre-nuptial agreement which provides certainty if things were to go wrong. The best time to do this is before marriage at a time when you do love each other and trust each other and can talk sensibly about ‘who gets what'. The same applies in business.
A properly drafted Shareholders Agreement or Partnership Agreement dealing with issues that might cause you to disagree in future can be the best investment the business will ever make. It can still be done at any time before a dispute rears its head but the sooner the better - at the beginning when you have just hit upon your business idea is best.
Like any relationship, if your partnership is a healthy one it will survive a little interrogation and sitting down with a lawyer to informally or formally talk things through.
Without an agreement in place, when cracks begin to show you could do yourself and the business more harm than good, closing the door on viable resolutions as emotions take over and instant communications such as email make it all too easy to react inappropriately.
The best approach to any business partnership is to proactively manage risk both before and after it is formed and to get a business pre-nup so that everyone knows exactly where they stand. If you don't, you may find that a boardroom table is the least of your worries.
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