If there were one mistake I could encourage you to avoid, it’d be this one.
Don’t, under any circumstances, think it’s ok to go into business without properly laid contracts.
Contracts keep you protected should anything not go as planned. Spoiler alert – that happens all the time.
It’s a time where you can objectively look at the scope of your project and discuss the “what if’s” without the tension that comes along with actually being in that situation.
In partnerships, this is a time when you can talk about what happens when:
- Disagreements on business decisions arise- specially in a situation where there are more than two partners. Do decisions always have to be unanimous? Or will 2/3 vote be sufficient?
- A partner takes short term leave
- A partner wants to leave the company. You want to make sure that the buyout process of the leaving partner doesn’t wipe out the business entirely.
- A partner dies. This may sound morbid, but if you don’t plan for this, you can get stuck working with your partner’s spouse for the rest of your business should something unforeseen happen, and who wants to do that?
- Any other points of contention you could see arising. Play devils advocate here and try to find answers for as many prospective scenarios as you can.
Once you’ve had those discussions, getting the help of a lawyer to draft up the agreement is ideal. Self help services like LegalZoom can only get you so far, and can leave you in precarious situations should any real issue arise. It may be expensive, but most lawyers work fast, and its worth every penny to know that you and partners are protected.
Even for smaller or short relationships, a contract helps show each party what the expectations are and who is responsible for what. Writing these things out helps to eliminate gray areas and keeps everyone accountable for their own portions of the deal.
Working together on contract terms can even build camaraderie, as you push towards a mutual goal.
I’ve never seen anyone be disappointed by having a well laid agreement. Instead of waiting for inevitable conflict, it’s really best to broach those topics before they happen.