Since all good things (and hopefully all bad as well!) must come to an end, it’s important for entrepreneurs to set clear expectations at the beginning for how to exit a partnership.
I’ve had several really good, healthy partnerships, and I’ve had several that, to put it mildly, “went bad.” I’ve found these situations to be among the most painful, drawn-out experiences of my life. As I reflect on these partnerships it’s evident that each began to go south when one of two things occurred:
- Our ultimate goals or intentions became misaligned
- We began to seriously question each other’s motives
Once one of these things had occurred, it was all downhill from there.
In Chapter 19,“No Exit Strategy?” I will describe in detail a variety of ways to exit your business. For now, I’ll just reiterate that the exit plan must be clear. Your hope and design is that the exit will be a good thing for all involved. But what if it isn’t? What then? Plan it and capture it in contract form. Have your attorney review it. Make sure both the amicable separation and the hostile separation are clearly defined. Then do your best to ensure that the parting of the ways is a positive experience for all involved.
Business partnerships are not intended to last forever. Oftentimes, there will be an exit, and many times, there even should be. Your business agreement did not contain the words, “’Til death do us part,” so why should reaching the end of your road together be surprising? The problem with terminating a partnership stems from your exit plan not being laid out and having an unclear “last step” in the life of the partnership.
In reality, the ultimate success of any business is to have a positive exit event, which by its very definition means a parting of ways. If you leave it to chance, there is no question that people will get defensive, and what could have been a preplanned, celebrated, and successful parting of the ways will become something ugly—something very, very ugly.
Porter’s Points—Time to Part Ways
- Your partnership will end. Do not let the ending rest on happenstance–plan it out.
- Your ultimate success as a partnership will be a successful exit. Your worst failure will be a hostile parting of ways.
That does it for Chapter 7: Fish & Partners! Next time we’ll start talking about the big mistakes that kill most small businesses and how to avoid them in Chapter 8: Avoiding Cow Pies.