Entrepreneurship

How to Structure a Successful Business Partnership

dynamicsplit

If growing up with 3 siblings taught me anything it’s to be fair.

When two people want to start a business what normally happens is they split the company shares 50/50 or 51/49 depending on who’s business idea it was. They split the cost then get a lawyer to draft up the shareholders agreement and “tada” they’re in business.

Then they start the business and in less than a year one of the partners starts to feel like the other partner isn’t pulling his or her weight. They feel like they’re doing more work while getting the same result as the other person.

Things become unfair.

The problem is the structure. Because the split is fixed and life is dynamic the partnership is bound to run into problems. Things change, people talk a big game but don’t deliver, priorities change and so do interests. Considering you’ve never been in a partnership with this person before there’s just too many variables for a fix split.

Instead shares should be dynamic. Shifting on a daily basis from the contributions partners bring to the company. Contributions in a startup usually include time and money. When a partner puts in money they get shares. When a partner puts in time they get shares.

Each partner logs their daily contributions as they go. Mike Moyer created this rulebook for the dynamic partnership model. A book most lawyers will dislike but every entrepreneur should read.


Also published on Medium.



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