Rule #6: Financing and Guarantors
If you have noticed, many of the posts in this list involve thinking about some rather unpleasant things. Do not avoid thinking on these things. If you do, it will be to your peril. I am sure that you have read the statistics about how many new businesses fail. And while your thoughts should be geared toward how to succeed rather than simply keeping your company from failing, you must prepare for hard times.
Rule #5: Exit Strategy
When starting a company you only want to think about all the things you need to do get your business to begin. Most people generally do not want to think about how their business will end.
But an essential thing to discuss with your partner is your exit strategy.
Rule #4: Owner’s Equity
Dividing up the shares of your company with your partner should be addressed early on. The instinct that many people have when starting up a company with another is to say at the outset that each person should get an equal share.
But this should not be done simply as a matter of principle. The division of shares should follow one of two models.
Rule #3: Compensation
When thinking about a friendship, both friends bring different qualities to the table. Some may have book smarts or street smarts. Some may bring humor or compassion or practical life skills. In a friendship, you do not value the friends based on what attributes they bring to the relationship but on your mutual affections.
In business it should be the exact opposite.
Rule #2: Who is in Charge?
When entering into a new business venture that involves you and one other person, it is important to make the decision about who is in charge. Ideally, the two of you should be able to make things work as equals, but too many business ventures run into problems because of the paralysis that comes from having two leaders with equal power.
RULE #1: Define Roles
Sun Tzu wrote one of the best-selling books in human history: The Art of War. In this ancient writing, the author gives direct and practical advice to someone who wants to be victorious on the field of battle. And while running a business is not the same thing as directing armies in life or death struggles, many of the principles of communication and discipline can be applied.
I Love Movies.
That’s something you should know about me up front.
For me it goes beyond the casual past time. Growing up, my family life was filled with movies. In fact, no matter how much life caused stress or distance or any kind of separation in my family, the one common ground we had to talk about were the movies.