Few things are more fun than brainstorming with a like-minded friend about ideas that can change the world. At first, it seems like implementing the ideas and sharing your brilliant spark with the world could not be more fun, but eventually you will have to face lots of harsh realities. How many people have married their soulmates only to find their marriages plagued by conflict about money? The same can happen when friends start a business together; you become financial partners, and having similar ideas about your company does not automatically translate into having similar ideas about money. The following are three common sources of conflict between startup co-founders. A San Diego business partnership dispute lawyer can help you resolve them.
Dividing the Workload and the Profits
When the project is fun and aspirational, no one thinks about who puts in how much work because the work is its own reward. Once your idea becomes a business venture, you should put in writing what each partner’s responsibilities are and what share of the profits each person will receive, if and when the company becomes profitable. You should also formalize decisions about salaries for the phase when your startup is operating with modest funds. Skipping over these basics is a recipe for resentment if one co-founder gets to spend his day enthusing on social media about the product and sweet-talking influencers while the other spends their days schlepping to the post office to ship orders and responding to emails with customer complaints.
When and How to Go Big
Nothing sows discord among friends like the promise of wealth. The fun of owning a small business is at risk when the officials in suits (or, perhaps in this generation, in cargo shorts) show up and start talking about huge amounts of money. Once you start getting offers from big time investors, you should talk to a lawyer about formalizing an agreement with them, so that all the co-founders can be confident that they are getting a fair deal.
When and How to Get Out of the Game
One of the most conflict-prone aspects of operating a startup is when one of the partners decides to leave the business, or when the other partners want to force them out. Sometimes the partner who is leaving the day-to-day operations wants to keep some ownership in the business, which could become much more valuable if the company goes big later on. For these reasons, your initial business organizing documents should spell out in writing how to handle buyouts, transfers of ownership, and dissolution of the company. There is even more room for things to get ugly if one partner accuses another of mismanagement of the company’s finances.
Contact Foldenauer Law Group About Startup Partner Disputes
A business partner dispute lawyer can help you prevent and resolve disputes among the partners in a startup at any phase in the company’s life cycle. Contact Foldenauer Law Group, APLC in San Diego, California to discuss your case.