Business breakup tips to help you let go of relationships that don’t work and find the ones that will.
Building a startup is a bit like starting a family. In both situations, choosing the right partner is a big freaking deal. If you don’t take it seriously, you could be staring down the vengeful eyes of an ex-business partner who wants to take you for all you’ve got. Having met thousands of entrepreneurs at every stage of business, it’s rare to not have had a breakup.
If you think I’m kidding, startup breakup rates are 20–30% higher than divorce rates.
On the other hand, what if you find yourself saddled with a business partner that is generally a nice person but just doesn’t have the right skillset? It can be a difficult and painful separation that can cause years of trauma for both parties.
Having been through a few nasty breakups myself, I’ve compiled some life lessons around parting ways. With some guidance, you might be able to avoid the angry ex spray painting your car thing. Letting go of relationships inevitably open up opportunities to help you choose your next business soulmate.
1. Keep things Professional
Near the end of a business relationship, tensions are high. Chances were, you became best friends when things running well. Now, they’re not carrying their weight. Or worse, they’re trying to carry your weight and push you out of the business.
Yes, feelings are involved, but so is your financial security. You have to remember to keep business and personal matters separate. Instill a 24-hour cooldown period if you feel yourself getting tense. The best thing to do is not respond when you’re heated. Take the time to carefully communicate and try to consider the other person’s perspective. Closing relationships requires give and take AND respect. Try to remember that we are all human.
2. Evaluate your Situation
Quickly identify your priorities and what needs to be done practically. Will you approach buying out the partner? What are the financial and operating risks of a buyout? Would a business classification change be better? Do you dissolve?
Evaluate the tax responsibilities, your financial situation, and your financial/professional goals. Try to ask your partner to prioritize the things that are most important to them and you do the same. Then come together and discuss what can be given and what you need to negotiate. You’ll be surprised how different your priorities may be, which leads to an easier separation.
3. Document Everything
Remember, everything can be used against you. Everything. Be careful about what you say, what you promise and what was agreed on. If you meet with your partner to discuss anything, follow the meeting with a written recap. Request that they confirm receipt and have approved the discussed notes. While you shouldn’t assume negative intent, communication is tricky and can be easily misconstrued.
Identify who gets to announce the separation first, in what medium, who gets the equipment, shared software, etc. And work together on what is said and written about the separation.
4. Get Help
When you’re planning an exit strategy, you might need an unbiased pair of eyes helping you look through everything. You could ask a financial expert, a mediator or even a lawyer to help you. Be prepared though, when lawyers are brought into the situation, tensions are bound to escalate. I’d recommend trying to work things out between each other before getting an outside party involved.
It might even be time to revisit your partnership agreement. An expert will also help you look through the business’s financial report to help protect your interests.
5. Move On
There’s a time to eat ice cream in your pajamas and watch sad movies. There’s also a time to get your life back in gear and protect your interests. You need to get out there and protect your baby during this vulnerable time.
Don’t sit around wishing you could go back to better days. Better days are on their way, and your business is going to be better than ever.
Starting a New Chapter
If you’ve had a bad breakup before, then I understand that you’re feeling a little wary of starting a new partnership. It’s tough putting yourself out there again. It was also tough starting a business, but you did that. Now, you need a new partner, and you’re going to do that too. If you decide not to have a new business partner, that’s okay too. You can do it! The tips below are for if/when you decide you need a new partner.
Step 1: Be Realistic
Every partnership starts with sunshine and roses. Don’t be fooled by the glow of a new partnership. It happened to Mark Zuckerberg and Eduardo Saverin. And let’s not forget the legendary Steve Jobs versus Apple debacle. Even some of the world’s greatest bands weren’t immune. Plan ahead and make your partnership agreement airtight. Before committing to each other, discuss what would happen if you were to break up. Schedule a lunch and lay it all out. What do both parties walk away with if you were to divorce? Who gets the kids or the dog? Write it out and have both parties sign the agreement. It’s OK to compromise sometimes, but make sure that your interests will always be protected.
Step 2: Find an Equal
Smart people fall in love like everyone else, like fools. Love hides all sorts of problems and even puts up with them. You’re not here to tolerate your partner. You’re not here to find love. You want someone who’s going to contribute skills, expertise, resources, and credibility. They have to contribute something substantial, or they’re going to drag your business down. Don’t forget that their goals and values have to match your own, or there will be massive problems down the line. Add these roles and responsibilities to your document so everyone is clear. Consider doing some personality tests: 16 Personalities, Strengths Finder, even The Five Love Languages. It can be helpful in understanding how to best communicate with each other.
Step 3: Stability is Key
We always remember to look for financial stability, but sometimes we forget about emotions. Your partner needs to be stable in more ways than one. How do they manage money? And how do they handle stress? We’ve all been through some rough times, but leave that baggage at home. Make sure that your new partner isn’t carrying a chip on their shoulder, or hiding serious financial problems. Start with a clean slate by being upfront and honest with expectations.
Step 4: Do You Respect Them?
Do they respect you? A good relationship is built on respect. If one of you doesn’t have it, then the partnership will go down in flames. A partner needs to feel respected and want their contributions will be appreciated. Do you go into meetings raving about them and grateful for their skills? If you don’t, then don’t even bother. You also need to make sure that their values make it easy to respect them. If they practice bad business ethics, then people won’t respect you or your business. Remember that your business’ reputation is on the line.
Step 5: Work Together
There’s no such thing as a perfect partnership. It requires work. You may even consider going to a counselor together if you are having trouble communicating. Remember you need to be a good business partner as well. Don’t run away when things get tough. Choose someone who you can talk to. Do as much as you can to make your partnership work, but don’t be afraid to let go if you’re the only one who’s still trying.
Jenny Poon is a writer, community builder, data-enthusiast, efficiency nut and founder of CO+HOOTS Coworking — a nationally ranked purpose-driven coworking space. Follow her on twitter at @poondingo.