A Sad State of Affairs

Written by Jenifer Gifford on .

I have had the unfortunate job of counseling half a dozen sale organizers through partnership splits here of late. And the one thing I hear over and over again from the women I counsel is that they miss their friend. This business was one that was built upon friendship, and yet one friend goes off the deep end. Sadly, it is almost always over money.

It is a sad state of affairs when you compromise your morals and your friendship over money. I have seen partners do awful things when they don't get their way, just because they can. And it makes me sad. Sad these ladies have lost not only their business partner, but the friendship of one of their closest confidants. It is sad to see that people will do and say anything to prove they are right and their former partner is wrong.

But the truth of the matter is, things don't have to be that way. There are amicable ways to dissolve your partnership. What have you got to gain by spewing hate and anger towards your former partner? I have seen a consistent pattern with these partnerships gone wrong and that pattern usually ends up with one partner so consumed with hate and anger, that they jeopardize everything: marriages, family and friends, along with their business.

Hate finds you all alone, without your friend, without your business and eventually without the money you so longed to attain. For all you partners out there, remember, this is not just your business partner, but also your friend. It's someone you are going to miss talking to.

Before you get into business with anyone (for any reason) be sure to put everything in writing. It's bad enough to have to go through a partnership split, don't allow anger and hatred tear up your friendship as well.

And for those of you who take the high road and hold your tongue... you'll be glad you did. God will grow you through this and you will come out more resilient and more dedicated than ever.

There’s no need to miss someone from your past- There’s a reason they didn’t make it to your future” – Unknown

Get It In Writing

Written by Jenifer Gifford on .

Too many times I have seen partnerships turn bad. It always starts with "but Jen, we are best friends and we agree on 99% of everything. We will make great partners!" Maybe so. But any business is stressful on a friendship, and the best thing you can do is to put a plan in motion ahead of time before tempers get flared and emotions get hot.

I know, I know... you and your partner are going to buck the trend. You are getting along so swimmingly that this is advice you really don't need to take... or is it?

Let's take a few minutes to review a couple of possible scenarios...
1. You or your partner gets divorced. Did you know that in most states a spouse owns 50% of everything to be produced by the marriage? That means that you and your business could potentially be drug into the middle of a nasty divorce. AND her ex- may now own 25% of the business. How is that going to work out for you... and her?

2. You or your partner are facing bankruptcy... if your business isn't set up correctly from the start, you may be drug into that as well.

3. Your husband or your partners husband has decided that since he built the racks and designed the website for you, he wants a cut of the action. Nope.

The scenarios go on and on. But even if these horrible things don't happen to you, what about if you or your partner just want out? Maybe you have a different vision for your sale. Maybe you have decided that you don't want a 1000 consignor sale, but she does. What is your plan and how do you do that without ruining your friendship?

Who will handle the money? the taxes? the advertising? the vendors? the equipment? Put it all in writing before you start a consignment sale or any business. Too many times relationships are ruined over things that could have been avoided if you had it in writing before you went into business together. So take same advice from someone who knows... and get it in writing!

Click the link below to purchase an instant download Partnership Agreement.

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Breaking Up Is Hard To Do

Written by Jenifer Gifford on .

The last two weeks have been particularly busy as I have been contacted by several businesses who need advice on dissolving their partnerships and valuing their businesses. It's always hard when people are emotionally involved, because inevitably one partner always feels slighted. Been there, done that, got the t-shirt.

But splitting a partnership doesn't have to be a bad thing. Here are a few things that you need to remember when splitting up your partnership.

  • If you have started and built your business together, you both own 50% of the business. Thinking that you own more than that is not just selfish, it's down right wrong. Your partner has put in as much work as you have and you need to remember that.
  • You can't just pick a number and say "I think the business is worth $X." You have to have a reason for what you are valuing the business at. This is where it's a good idea to get an independent 3rd party evaluation. Replacement cost is the typical standard for valuing because let's face it... if you have to replace it, you need to have that value. Sometimes its a new replacement cost and sometimes it's a used replacement cost. You have to look at the equipment and determine if you can buy it used. You are probably going to have to go with new on things like 2x4 racks and poles because those items can't be bought used. You have to make them. But if you are valuing chrome racks, those items can be bought all day long on craigslist for a discounted price.
  • Everything has value. From your mailing list to your equipment to the money you will be making without your partner (if one of you continues to do business), it all needs to be considered. You don't get to keep the mailing list just because you feel like it and try to convince your partner that it has no value. How much value would it have if your partner used it to start a sale across town or gave it to your competitors? How much time was involved in collecting that information?
  • Split the assets down the middle. Half the racks, half the computers, half the baskets. Not "I get all the stuff I want and you get whatever I don't want". Unfortunately this attitude of "you can have my left overs" is very common.

Remember, that a dissolution doesn't have to be nasty. You can and should find a way to split the assets and move on. Being a cheap and nasty partner will not benefit you in the end. The only one who wins when you get nasty is the lawyers, because you will have to pay out the nose to fight over pieces of 2x4's and electrical conduit. Do you really want to go there? Is it really worth it? It's not. So don't let it get nasty. Be honest and upfront and sit down and do an equitable division of assets. Don't be petty.

If one of you plans on staying in business, yes, you will need to buy the other partner out. Think about it. Would you want someone to profit from your hard work without paying you? No, you wouldn't. So why would you do that to them?

Seasons in your life will change. So will your partners. You are not going to be in business together forever. There is no reason to be spiteful, hateful or angry. It's just life. So work out a fair valuation and payment schedule and move on. It's the best thing you can do.

Copyright Jenifer Gifford 2012. All Rights Reserved.