Starting a business with your spouse is similar to your marriage because you both make the decisions and are responsible for the company. When you are both invested in the business, it is crucial to understand both parties’ expectations and responsibilities clearly.
This way, you can maintain a healthy relationship and business. To do this, you will want to establish ground rules before entering a joint business venture. It would be best if you also discussed how to equitably split your business on the off-chance that you separate in the future.
Here are a few tips on how to do just that:
1. Define the roles and responsibilities of each party.
Both parties must understand their roles and responsibilities within the business. This way, there is a clear understanding of who is responsible for what tasks, and there are no surprises that can potentially derail the company. From the business angle, it also helps to delineate roles to avoid any potential conflict of interest.
For instance, one spouse may be responsible for the financial side of the business while the other manages the day-to-day operations. Alternatively, you may both be involved in the decision-making process but have different areas of focus. Whatever the case may be, it is important to discuss each party’s roles and responsibilities before getting started.
You should draft a partnership agreement if you want a legally binding contract. This document will outline each partner’s roles, responsibilities, and rights in the business. The partnership agreement can also help to prevent any disputes that may arise in the future, such as what happens if one partner wants to leave the business.
2. Discuss how you will split the profits and losses.
You might find it challenging to discuss the financial side of the business with your spouse, but it’s necessary to have this conversation before getting started. After all, you will both be invested in the company and need to know how the profits and losses will be divided.
Keep in mind that profit sharing should be fair and equitable, based on the contributions of each partner. Similarly, you should share losses equally unless one partner is at fault. This way, both partners feel like they are being treated fairly in the business.
3. Set up a regular check-in schedule.
Since you will be invested in the business, setting up a regular check-in schedule is crucial. This way, you can touch base with each other regularly and ensure everything is running smoothly. The check-in schedule can be weekly, bi-weekly, or monthly, depending on your preference.
During these check-ins, you can discuss any challenges you are facing, new ideas you want to implement, or any changes that need to be made. Regular communication will help keep both partners on the same page and prevent misunderstandings. Having this check-in is essential not only for your partnership, but also for your marriage.
It is not enough that you eat your meals together and sleep in the same house; your partnership should also extend to your business. After all, you are both invested in its success. Regularly communicating with each other can help strengthen your partnership in business and marriage.
4. Have a plan for what will happen if your relationship ends.
No one likes to think about the possibility of a breakup, but it is essential to have a plan in place in case it does happen. This way, you can avoid any disputes arising while in the middle of the separation proceedings. It could also help to have separate divorce attorneys so that each party can get unbiased legal advice.
One way to do this is to create a buy-sell agreement. This document outlines what will happen to the business if one partner decides to leave. For instance, the agreement might state that the company will be sold, and the proceeds will be split evenly between the two partners. Alternatively, one partner may have the option to buy out the other’s share of the business.
Having a buy-sell agreement in place can help prevent any disagreements if you decide to part ways. It also gives each partner a sense of security, knowing there is a plan for what will happen to the business. So, if you are considering starting a business with your spouse, consider drafting a buy-sell agreement.
Remember that it’s not just a business venture, but also a marriage. Following these tips can help ensure that your joint business venture is a success, even when sharing the assets and responsibilities. And on the off-chance that you decide to end your relationship, you’ll know how to split your business without any disputes equitably.