By Senior Editor – Kris Smith

We’re getting into the nitty gritty of startups today! I wanted to take a moment to explore startup business partnerships.

When you take a look at the personalities needed to grow a business from the ground up, often they are very similar and don’t make for easiest relationships. Disagreements and gray areas first tear them apart . . . and with them goes the business.

Let’s look a little closer.

Choosing a partner

Finding the right partner to begin a startup with is like magic. It’s more special than finding the right person to spend the rest of your life with. Don’t tell my wife that I said that. OK?

I could sing new media country songs about the woes of handwritten contracts, missed opportunities, legal bills and partners that just can’t hold up their end of the bargain. Love is easier than a startup business partnership.

However, when you have a partner that is pulling their weight it’s as easy as hanging out with your best friend. And working together on the same vision. I put a lot of stock in this best friend analogy.
You can do and say things with your best friend that you can’t with anyone else. You can fight with your best friend, makeup and have a stronger relationship than before.

How to get it right

Put a written operating agreement in place. One that both of you are happy with. Happy doesn’t mean you get everything that you want, but one without any gray areas that can make you question the duties of your partner or yourself. There shouldn’t be any surprises.

Next, take it to your attorney. Not ‘A’ attorney but yours. Your partner should take the agreement to their attorney as well. Hash out any issues with your attorney. Believe me, they will ask you questions that you didn’t ask yourself when you wrote it up.

Get back together with your partner and if you can work out the differences you can go forth and work late nights together in harmony and bliss.

How not to do it

There are too many ways not to do it to list here. But some of the big ones are not getting operating agreements in place, not having them attorney reviewed, not checking out your partners background and past business partners, not agreeing on a business plan or revenue model.

The most important is something I mentioned above. Never, ever, never under any circumstances sign an agreement or consult with the same attorney that your partner is using or that is going to be the counsel for your startup. You need to have an impartial arbiter and it should be your startup attorney. Let your personal attorneys do the dirty work and the startup attorney keep the best interest of the business in mind. If this isn’t the case, you could lose more than your partner, but your business, equity or cash. Limit your liabilities.

Talk to anyone that has worked at a startup and they can tell you the story of the that companies founders or a few of their own. Anyway that you find your way into a startup business partnership, always make sure that you have your attorney’s attention when you need it most. Hopefully, they’ll just be busy due diligence requests for a healthy exit.