Business Start-Up Specialist

What advice would you give 2 friends going into business together about how to function together professionally without jeopardizing the friendship?

Asked by dan79 over 11 years ago

My advice would be to have a conversation or series of conversations upfront outlining each person's roles in the business, how decisions will be made, who will get paid what, etc.  You want to go in to the relationship with a solid understanding and a realistic set of expectations.  And as you've probably heard a million times before, you want to document what you agree to in written form.

I think a lot of people are just so excited to get started that they don't take the time to get the procedural matters out of the way first.  Big mistake.  Invest the time to properly sett up your business and get your ducks in a row.

You don't want to be in a situation where one person is doing all the work and the other is juggling a dozen other projects.  I've had that happen to me, and it could have easily been addressed by just talking about what we each plan to put into the business.  There may not end up being any real issues, but nonetheless it's best to avoid any potential doubt or uncertainty. 

Now if one person doesn't live up to those expectations, that's another thing.  You want to plan for situations that may arise when one or both people are dissatisfied with the relationship and wants to move on.  In such cases, what will happen to the business assets?  What will happen to the ownership shares?  You want to document all of these things ahead of time in a partnership agreement or shareholders agreement, depending on the structure of your business.

Another important consideration is how decisions are made.  In 50/50 partnerships, you can find yourelves in a gridlock.  It's best to preempt such problems and agree ahead of time to how the business makes decisions.  A lot of people suggest that you assign final decision-making authority to one person.  I personally prefer to preserve the equal natuer of 50/50 partnerships and allow both people to have equal input, though giving final "tie-breaker" authority to one partner or the other depending on the specific decision.  That way you don't have one person making all the decisions, but rather making decisions for the aspects of the business in which that person specializes (marketing, account management, etc.).  You would go through and assign responsibility and ultimate decision-making authority to each area. 

Now these are just the basic things you should do to prepare for a partnership.  I can tell you that starting and running a business would put strain on any relationship so ultimately it's going to be important that the friendship is resilient and the people involved are reasonable and willing to make sacrafices for the good of the business.

You're 25. Do you get a lot of prospective clients who are iffy about working w/you given your young age?

Asked by brikhaus over 11 years ago

I've never had any potential clients make an issue out of my age.  For that I have to thank our company's track record, reputation, testimonials, and endorsements.  Among our clients are professionals of the highest levels including doctors, architects, and engineers.  In fact many of our referrals come from attorneys and accountants who trust us with their clients.

Have any of your clients ever gotten sued and therefore been thankful that their LLC gave them limited personal liability?

Asked by Jabber over 11 years ago

Small businesses lawsuits are a lot more common than you may think.  This infographic shows that 1 in 3 small businesses are sued or threatened with lawsuits in recent years: https://www.boltinsurance.com/news/miscellaneous/small-business-lawsuits-infographic/.

I have had a number of clients who have been sued and many more who have been threatened with lawsuits.  Significant legal expenses aside, the threat of a lawsuit is emotionally taxing on a business owner.  From their perspective, it's tough knowing that one lawsuit could destroy everything they have sacraficed so much to build in their business.  But if their personal liability is not limited, there is a far greater level of concern.

From the feedback I've received from many of my clients, liability protections provide peace of mind in addition to actual risk mitigation.  I have only heard positive feedback that forming a a limited liability entity such as an LLC was the right decision.

What advice can you give a young black college student. Who wants to start her own business. I like to help people who in need of help. How can I brainstorm to get to the next step after the next start even though I am still in school and work full.

Asked by Alicia over 8 years ago

What can you say about outsourced accounting services?

Asked by The Entrepreneur over 6 years ago

Is the scenario in The Social Network where Zuckerberg dilutes Eduardo without diluting his own shares realistic, or are there laws to prevent founders from screwing each other like that?

Asked by costa over 11 years ago