If I had to put my finger on just one relationship killer for those who get hitched – in business that is – it would be presumption.

Conversely, the common denominator those who are successful share is that they have proactively discussed, defined and agreed on common goals at the outset, and have then clarified their respective expectations on how those aims will be achieved. And, they keep repeating the processing.

It doesn’t matter if your new business partners are your closest work colleagues, your lifelong best friend or your parents; without aligned goals and expectations, I can tell you now: it ain’t gonna work.

One of the greatest investments you can make in your business at the start-up stage is to bring in your lawyer and accountant at the outset to help you draw up a shareholders’ agreement (if it’s a company), or a partnership agreement (commonly used by partners and spouses.)

Your advisers will work with you on a thorough, point-by-point checklist covering everything from the entity’s structure, share allocation and who gets what by way of returns, to who’s contributing how many hours to working in the business and a planned process for addressing any relationship meltdown.

I’ve had would-be business partners – some of whom are related or share close friendships – absolutely certain they are a money-making match made in heaven … only to realise that, actually, they’re not very compatible at all when we get down to the nitty gritty realities. Wisely, they bow out at that stage – personal relationships and bank balances still intact.

Laying the foundations

Advisers help keep the parties grounded long enough to get all the goals and expectations set and appropriate safety nets in place so, when the business soars, you and your partners don’t later crash and burn simply because you hadn’t contemplated the “what ifs” and have co-ordinated flight plans accordingly.

The agreement flows from your discussions, and can be tailored to a myriad of scenarios, documenting how the parties have jointly decided to run the company, as well as the expectations and rights of each signatory.

A common downfall in joint ventures comes around what to do with the profits. It’s quite staggering to see just how far people can go into a business together before discovering one wants to reinvest most of the gains to fund a quicker rise to global domination, while the other doesn’t really want to grow the company much at all and is, instead, eyeing the profits to bankroll a better lifestyle. By going through the process a shareholders’ or partnership agreement involves, the parties’ ensure their respective profit plans do, in fact, gel, with the agreement spells it all out in black and white.

With new ventures, it’s commonplace for one party to commit all or the lion’s share of the funding. When it’s a family affair, that’s often the parents. If it’s not clearly decided and documented who’s funding what and what returns there will be from it, things really can get murky and messy – Mum, Dad and Johnny Junior can end up at painful loggerheads.

All’s fair …

It’s also vital when people come together to run a business that they have really honest, realistic discussions around who will be committing what time to the venture. There’s nothing surer to sour a business relationship than one putting in 110 percent grunt, while the other’s skiving off every other day, if that isn’t what both parties expected, and agreed, from the start.

Your advisers will encourage you to tailor and document a fair arrangement – likely one where time spent working in the business is remunerated at a market rate.

Remember, too, whatever’s covered, these agreements are contracts – breach one, and you could be held liable for losses, or face a court order to toe the line.

They are, though, well worth the paper they’re written on – and then some. Interestingly, when I look at the business bust ups I’ve been called in to help sort out, the ventures have two things in common – the breakdown traces back to skew-whiff goals or expectations, and it’s very, very rare for the warring parties to have a comprehensive shareholders’ or partnership agreement in place.

It often makes me wonder, with a bit more thought and effort at the beginning, what could have been.

Business & Commercial Set-up & Structuring Financing