When you’re starting a business with someone, you’ve got tons of ideas, plans and goals for the future – but you also have to have an exit strategy in mind. Otherwise, you might end up in litigation in the future.
Planning how you and your business partner will part ways can ultimately save you a ton of stress, money and – quite possibly – your relationship. Here’s why you need one:
Think of your exit strategy as a prenup for your business
A good prenup outlines how couples with split assets, responsibilities and control over anything important if one or both decide that they want to leave. A good exit strategy for your business does the same thing. If you don’t have a written plan, you’re relying on memory and verbal agreements which can be problematic. Courts prefer written documents, not vague recollections of conversations held years before.
Ultimately, however, an exit strategy is designed to protect the business as much as it does the individual partners. Nothing can tank a business faster than a messy breakup between partners. Disputes over ownership, finances or retention rights can scare off customers, employees and investors alike. An exit strategy ensures the business keeps running smoothly, even if the partners aren’t on good terms and there’s a lot of personal drama behind the scenes.
So, what’s the bottom line? You plan for the worst even while hoping for the best. Starting a business is already a leap of faith, but that doesn’t mean you can throw caution to the wind. Talking about an exit strategy may feel uncomfortable, but it’s not pessimism – it’s preparation. Legal guidance can help make sure that you have everything in place for the future so that everybody is properly protected.