You may not think of your jointly-owned small business as a marriage, but, in many ways, that’s exactly what it is.
Both you and your business partner are legally connected. Your future success is connected. You must work together for the long-term good of something — the company — that you share. You have to compromise frequently.
Plus, breaking up a business relationship can be nearly as difficult as breaking up a marriage. Some recommend drafting plenty of documents to control the process and protect yourself. For instance, while two married people may use a prenuptial agreement, you may want to use a shareholder agreement.
Some studies have found that both marriages and small businesses that fail in the first five years do so because they struggle to deal with change. Much of the time, the change is financial. Money issues drive a wedge between the two people, especially when there is a serious lack of capital, and the relationship comes apart.
Of course, businesses also face many potential changes based on:
- The general economic trends
- Relationships between people who work at the company
- Changes to the business plan
- Changes in the market, such as a competitor coming onto the scene and taking business
- Changing roles and responsibilities
No matter how valiant everyone’s intentions were when the company began, these changes sometimes prove to be too much. That’s when it’s important for joint owners to know all of their legal rights to protect what they’ve worked so hard for. If you want to learn more about yours, our website can answer many of your most important questions.