I grew up in a family business so as you might imagine business was personal. It was also pretty casual. There were no agreements in place. There were no job descriptions and no real understanding about how the partnership would work. It just did.
Today business is much more complicated and would-be entrepreneurs are much smarter about operating agreements and other legal documents needed. But they often miss one of the key elements of success- the personal relationship.
The truth is, you never really know how someone will react in a business setting until you are there together working down in the trenches. That’s why I believe in a business prenup. It addresses the personal issues that are not usually part of some legal agreement. These are the fuzzy, grey areas that pop-up because everyone has their own unique personality, style of working and values. Here are a few things to consider.
First, you need to communicate. This is not a single conversation. It is probably a series of conversations over a period of time. That’s because you want to be sure that there is some consistency in the behavior of the person that you are considering as a partner. You also want to have time to reflect. It is important to have a structure to the conversations or at least a topic area. Takes notes. Then you can go back and refer to them later to see if they really resonate after the discussion. The topics will vary but these are a few of the areas to address.
What do you know about the person’s family? Background? Values? Individuals are influenced greatly by family.
Do you have personalities that really complement each other? How will you deal with differences?
Do either of you have problems with anger? No one is likely to tell you this so you have to be observant. This is one that can cost you big customers, issues with employees and legal bills when things get out of hand. Pay attention.
Will a spouse or significant other be involved in the business? If so, who calls the shots?
What is your idea of work-life balance? Does it match their perspective? How will you cope with differences where one person appears to work more than the other?
Does anything about the person bother you? Do they talk too much? Do they seem too controlling or too laid back?
Do they socialize with people that make you uncomfortable? Do they engage in risky behavior?
Are they good communicators? This is one that many people discount but it is one of the most important. If your partner does not communicate with you frequently and effectively you will find yourself in the middle of situations you did not anticipate. Then you end up in reactive mode, instead of proactive mode.
Do they pay attention to their health and wellness? Is their lifestyle a healthy one?
Do they coast through situations, avoiding confrontation? Who will deal with difficult situations?
Do they have a positive outlook, or are they more focused on the negative?
Are they solution-oriented or problem-oriented?
Do they have a sense of humor? Are they able to laugh at themselves and not take themselves too seriously?
Do they ask for help?
I left this one for the last because I think it is so important. When you are a small business owner, you simply can’t know it all. You have to rely on trusted advisors, peers, and others to help you navigate difficult situations. If you can’t ask for help, you are doomed to make mistakes.
If you are thinking about partnering up – get personal! Ask personal questions, really listen then agree to a plan for how you will operate on the personal level. Finally, revisit the business prenup every few years. Things change. People change. You want to be prepared.