Despite the separation of Tarek and Christina El Moussa, their split provides a lesson for small business owners and entrepreneurs. While marriage is tough, just look at the American statistics of 40% – 50% ending in divorce by the 10th year, a partnership is even harder because it normally lacks the emotional ties of a marriage.
Noticing Tarek and Christina in the news reminded me of some of my consulting clients. In particular, I got thinking about Ben and Jerry (not their real names). Ben did something typical of small business owners and entrepreneurs, especially when starting out. He brought in a partner because of the expertise the man would provide the company.
Now, if you bring in a partner because of money, i.e. capital, you really need, that’s one thing. But even there be careful how you design your agreement. As you grow, you will probably need an infusion of capital again. Will you have stock or a percentage of the business still available to use or will you lose your controlling interest in your own business?
But back to Ben’s situation. Jerry did have the expertise so from that viewpoint, he was an asset. Nevertheless, from several other viewpoints, he was a liability.
Ben was extremely frustrated over the situation. The problem was that he gave away almost half of the company to a partner without any recourse if the relationship went sour.
*That would have been bad enough were Jerry just an employee. However, as a partner, the company would have been liable had there been an accident.
**This is a plan best set up with an attorney as it gives a phantom ownership interest in the company without actually tapping into stock or capital yet still rewarding employees with a participating interest in the company.
I am not an attorney or CPA so for legal and tax issues, be sure to consult with them. In particular, be sure to run your planned agreement past your attorney before signing it. It’s far less expensive to have an attorney review in advance than to lose the ability to enforce your agreement due to a legal defect.
By the way, I do hope they get back together. There are some signals that Tarek and Christina might reconcile. They make a wonderful couple on their show Flip or Flop. Nevertheless, their recent split puts our attention on how difficult partnerships can be to maintain over time. Look at the above options you can use in place of actual stock or partnership. If you do decide to give an actual ownership interest, consider the points above then spell them out in your agreement. Finally, invest in having an attorney draw up the final documents so they will be enforceable and not negated because of a defect.
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Open your heart in selling,
John R. Aberle
I have a strong love for small businesses, especially brick and mortar companies. After an 18-year career in sales and marketing, I started my own service company, which I grew in both sales and profits for the first five years. In my sixth year, the bottom dropped out of the printer market such that it made more sense to sell my assets and return to Southern California. There I went to work for an international small business consulting company. I spent over three years on the road with them helping small businesses to become more profitable and better managed. I then started my own company specializing in sales and marketing consulting, coaching and training. My emphasis is on heart-centered, relationship selling that empowers prospects to make their own choices.
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