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You think marriage is tough? Business partnerships may be tougher

You've probably read all about the high divorce rate in the nation. If you're married, you may have firsthand experience with how challenging marriage can be at times. If you also happen to be a California business owner who is currently navigating the start-up phase with a new partner, you may be at risk for a break-up since the dissolution of business partnerships during the start-up phase is approximately 20-30 percent higher than the average divorce rate.

Perhaps you already have an inkling that your partnership may split. You respect the other person; after all, you shared a dream and really gave it your all in trying to bring that dream to fruition. If you still hope to make your business successful, and you want to part on good terms, you may want to seek guidance for how best to proceed to obtain an amicable separation of interests.

How to prepare for partnership break-ups

When you and your partner entered your business venture together, you may have thought your business relationship would last a lifetime. As a savvy entrepreneur, however, you understand that what you think may happen is often very different from how reality unfolds. The following ideas may help you prepare for a breakdown in your partnership as well as point you in the right direction for seeking outside support if needed:

  • Always have an exit strategy in place: No matter how well you get along with your business partner, it's always a good idea to have a dissolution strategy in mind ahead of time should any problems arise. You can think of this plan a bit like a prenuptial agreement, in that it helps avoid stress down the line because you already know what your dissolution agreement will be if things don't work out between you and your business partner. 
  • Know what your last straw is before it breaks: It's never easy when caught off-guard by an isolated incident or a contentious issue that gains momentum over time, when you begin to realize that your partner isn't who you thought he or she was insofar as how he or she does business. Know what you expect, and make sure your partner knows this as well. That way, if it doesn't pan out, you can simply do what needs done to end the partnership and move on.
  • Recognize the top issues that cause splits: A partner not carrying a fair share of the workload, personality clashes, different business styles and disagreements about finances or other major business issues are some of the most common reasons partnerships fail. If you know how to spot potential problems before they get out of hand, you may prevent a lot of stress and, perhaps, even legal trouble.

Many California business partnerships fail. Determining that you and your partner should not be in business together does not necessarily mean your business will not be successful. It may just mean you need to restructure your start-up plan and make a few changes. If you don't think an amicable split is possible, you can seek legal representation as soon as possible to avoid major problems.

An experienced business and commercial law attorney is a great asset most business owners like to have on hand if they think a court battle of any kind is in the future.

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Chodos & Associates
1880 Century Park East
Suite 615
Los Angeles, CA 90067

Toll Free: 866-986-7255
Phone: 310-598-3405
Fax: 310-203-3866
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