Today, Richards Rodriguez & Skeith partner Kathryn Turpin discusses an issue that she helps business owners out with a lot, and that is how to structure the relationship among the owners of the business.
Clear Expectations
So, my perspective on this issue, and really with all business issues, is that business relationships, just like personal relationships, work far better when everyone’s expectations are clear. With that as a goal, I encourage co-owners of a business to clarify their expectations and agree upon what should happen when certain situations arise.
Situations Like:
- Are all of the owners expected to work full-time, or part-time, or a minimum amount of time with the business?
- What happens if an owner decides he or she needs to get a part-time job?
- What happens if one owner has an opportunity to invest in a company that is somewhat competitive with the business?
- If all of the owners are expected to work in the business, what happens when one of the owners wants to retire?
- Or they have to retire because of health?
- Of course, the ultimate question is what should happen if one of the owners were to die?
- Can the family of the owner inherit that owner’s interest in the business?
Be Prepared
It’s good for co-owners of a business to be prepared for these situations, and to have agreed ahead of time whether or not the other owners of a business have the right to purchase a retired or deceased owner’s interest in the business, and how should the purchase price be determined. Co-owners of a business would be well-served if they just clarify their expectations of how these situations should be handled.
I help owners work through these situations and structure the relationship among themselves so they know what will happen and they can spend their energies and focus on running the business.
For more information on this topic, contact us today.