Imagine that you, together with your colleague, the lead programmer with whom you have worked for the last 4 years in the bank, come up with something unimaginable that the market needs so much. You have chosen a good business model and strong guys have joined you in the team. Your idea has acquired quite tangible features and the business has practically begun to bring money.
If you don’t follow the rules of hygiene at all, be toxic, inconsistent, self-serving, deceive others, then you won’t get to the first money at all. Imagine that everything is fine, you are all great and the time is not far off when the first serious profit will go. Here the castles in the air are crumbling, which were so meticulously built by each member of the team. The first one thought that he was in charge and he would take 80% of the profit, since it was he who sold the car and the whole team lived on his money for the first time. The second thought that the two founders would receive 50% each, since he is a programmer and created the very application on which everyone is now making money. The third and fourth thought that they would get a share in the business as soon as the money came in, because they worked almost around the clock and received much less than they could in the same bank.
As a result, the business is in danger of collapse. But all this could have been avoided by correctly agreeing on the shore. How? Through communication and joint preparation of a partnership agreement.
The partnership agreement is the basis of the relationship and the basis for the preparation of the necessary legal documents. In this article I will not touch on legal issues, since the main thing is to agree, and lawyers will help to sign the necessary documents. Based on my own experience, I will tell you what non-compliance with business hygiene rules can lead to. After all, the main task of a partnership agreement is to remind about the agreements. If something starts to go wrong, you can always get a document and point out to your partners as you agreed. Usually this is enough.
Everyone must have heard that you can’t start a business with friends, you can’t help but negotiate on the shore, you can’t hire friends as employees, etc. So, I have already made all these mistakes and I can say that this is an invaluable experience that I would like to share with you.
Dima
We were best friends. Together they studied at the Physics and Mathematics Lyceum, went to the Olympics, went to concerts, listened to Metallica. He entered the Moscow Institute of Physics and Technology, I went to MEPhI. All this time we talked, made friends, wrote songs, grilled kebabs in the country. After graduating from institutes, both, by the way, with honors, went together to the same graduate school. But there was no money in his pocket. None of us planned to go into science. And, sitting in my dacha, and thinking how to make money, remaining free, we decided - we need to go into business. A month later, an LLC was registered, at the age of 22 I became the general director. We started selling our competencies in the implementation of electronic document management systems to small businesses, which we received while working at the last courses of the institute. More precisely, these were Dima's competencies, I worked a little in the last courses, I studied more.
The first year went well, but the second gave us the crisis of the eighth or ninth year and a sharp decline in demand for document management, especially in small businesses. It's good that we had a programmer and SEO specialist on our staff and we completely switched to website development and internet marketing. During the crisis, advertising grew well, and there were quite a lot of orders. But one day Dima comes to me and says: “Kolya, I have registered my company, we are splitting up.” For me then it was a shock. As the beloved girl said: "Kolya, I found another, let's disperse!". It was useless to argue. We did everything in a civilized manner and without any particular tragedies. They sat at my house, wrote on a piece of paper what went to me, and what to him. Now Dima has a successful business that goes beyond the borders of the country, and we continue to be friends, which I am very happy about.
Сonclusion: minus 5 people out of 9, minus 5 large clients out of 8 and minus the entire direction of Internet marketing, only website development remained.
Hack and predictor Aviator: we had little heart-to-heart contact, which is important to whom. I did not know that it was important for Dima to be the first, to be the face of the brand and to be fully responsible for his direction. If then we had talked to him in advance, agreed where we were going, how and in what partnership, then there would not have been a break. We continued to communicate as friends, but it was necessary to communicate as partners. Communication is the key to everything.
Sasha
After the “divorce” with Dima, I was lucky to work with a wonderful web studio, the head and co-owner of which was Sasha. We sat down together in the same office, they have 10 people, I have 4, and started doing joint projects. I sold and managed projects. The resources of developers and designers were essentially common. I have programmers who make sites on MODx, they have on Bitrix. I won’t say that we were bosom friends, but we regularly organized joint parties and corporate parties. As I thought then, we were good partners and understood each other well. Then we made several interesting projects: a distance learning system, a video communication system for the Ministry of Education of the Moscow Region, an online store for the largest supplier of souvenirs in Russia. In addition, I started working with Moscow and providing services to support their sites. This took up 110% of my time and the MODx site production line had to be shut down. I thought that we are doing one business, where there is both support and development, that they are my partners, and that normal money is about to go and we will begin to share it together. But somehow, after talking with Sasha, I realized that in fact we are two independent organizations. Both companies grew, and one office was not enough, we parted ways.
Сonclusion: minus the direction of website development, plus the growing business of operating information systems.
Hack and predictor Aviator: again the problem was lack of communication, my expectations were different from what actually happened. Plus, we never discussed anything in advance. And this was the source of small conflicts.
Artem
Artem and I were friends, took pictures together, were active members of the photo club. He had his own “built” business, I have mine. I considered Artem a very cool manager. And I sincerely envied him that somewhere he has a permanent source of income, where he does almost nothing, where his wife helps him, where a couple of programmers and a system administrator work remotely, and the business brings a good income. At that time, my business was growing very quickly and I needed help. He offered it to me “in a friendly way”. Like, I don’t need anything, I have money, I have my own company, I want to work together and I want to help you. Of course, we did not discuss anything on the shore. A year has passed. More than 30 people have already worked in the company. The turnover was under 50 million per year. And then we were visited by satellites of rapid growth - cash gaps. We took on new obligations, but we did not receive money for them, since we were paid with a delay of up to a year. Indeed, there was a crisis in the company at that time, and I felt that I was to blame for it. We couldn't pay wages on time. It was very painful and hard. The burden of financing the payment of wages fell on me, I spun as best I could, friends know. As a result, I left the business, Artem became its CEO. I am out of operations. I sincerely believed that Artem would be able to rectify the situation, calm people down, and diversify the business. But it happened differently. Artem, with several people, created a new company, without bloody government contracts, without problems and unnecessary ballast. It turned out another small “built” business that can work stably and can bring a steady income.
Сonclusion: minus 15 people, minus the development department, minus the entire management team, I was left with an almost ruined business and a small spin-off with our development inside
Hack and predictor Aviator: my trust, self-centeredness and rose-colored glasses did not allow me to recognize clear symptoms. I also did not see that the team then really wanted only one thing - money here and now. I built a business in the future, they are in the present. We had very different interests and again no agreements fixed anywhere.
Ivan
Working with Moscow with their portals and information systems, I always dreamed of doing something similar and no less significant for other areas. I met with governors and their deputies several times at exhibitions and offered our technology. Then, within the company, we developed a platform codenamed “AIST” based on the Java Spring framework and various other popular frameworks for Java at that time, and received a certificate for it. In 2013, we conducted a successful pilot implementation in Dubna, launching the automation of some public administration processes. Moreover, we consciously did everything with our own money. A few months later we received the gratitude of the head and a letter from the governor. But there was no money for implementation in the city at that time. I always felt like a techie who doesn’t know how to sell, especially to officials, but knows how to do projects well. My friend Ivan decided to support me, and together with him we created a company where I invested the technology, he invested his strength, experience, and time. Together with him, we implemented a large project in one of the areas. Then a lot of nerves and energy were spent, and there were normal work conflicts with him. It was very difficult for me personally to work with Ivan due to our interpersonal differences. Both are strong leaders with opinions. We blamed each other for our failures and rarely rejoiced in our victories. In the end I gave up. The project was completed, and I began to work in parallel in another place. It was time to part ways. This time everything was done flawlessly. We sat down in a restaurant on Novoslobodskaya and looked at the piece of paper that we signed a year ago. We took out management reports and calculated what everyone owed to whom.
Сonclusion: minus a share in the company, plus a good cash, and we remained friends.
Hack and predictor Aviator: the first time then we did everything right. We have signed a partnership agreement. In it, we described who has what area of responsibility and what who gets in the event of leaving the company.
Main conclusions
If on the shore, before starting a joint business, every time I signed a conceptual agreement, there would be much less problems in life. Much later, I listened to Gor Nakhapetyan's lecture at Skolkovo on tandems and partnerships in business, and read David Gage's book “Partnership Agreement. How to build a joint business on a reliable basis”. My stories only confirm that there are several mandatory sections in the partnership agreement and should not be neglected.
Next, I will describe the main sections of the partnership agreement, as a base I took the partnership agreement from David Gage's book. I will also give the main questions that I recommend asking each other when preparing an agreement, so that later, by asking them, it will be easier to write this agreement.
Guide to preparing a partnership agreement
Preamble
- Why do you need a partnership agreement?
- What happened before you decided to make it?
- What can change after it is drafted?
- How often will we review the partnership agreement?
Section One: Business Aspects
1. Vision and strategic direction
- What is our business?
- What is our core value?
- What are we focusing on?
- What do we want to achieve?
- What is it for each of us?
- What problems do we need to solve?
- What is the criterion for achieving the goal?
- What will be the exit for each of us?
- Will we buy other businesses?
- Will we grow organically or not?
- Are we ready to join a bigger business?
2. Ownership
- Who gets what shares in the business?
- Who invests what (money, time, experience, connections, etc.)?
- How is a company valued?
- Is the option holder the owner and partner?
- What are the rules for transferring shares in the event of leaving the company (consider different options)?
- What are the goals of owning a business in light of achieving a common goal?
- What are the rules of the option program, if any?
- Who is involved in financing if there is a cash gap?
- What are the rules?
- How are new member contributions made?
- Who has what preferences?
- Who acts as a fiduciary in negotiations with investors?
3. Operational management: positions, roles and principles
- Who is responsible for what and what does it do?
- What are the clear lines of responsibility?
- What is the management structure of the organization (board, CEO, forms of voting and decision-making)?
- What principles will we be guided by in building a management structure?
4. Employment and compensation
- Who works and how much?
- Is it possible to work somewhere else on the side or freelance?
- What needs to be agreed with partners and what not?
- Is it allowed to work for a competitor if the person leaves the partnership?
- Who has a salary and other benefits?
- How are awards calculated?
- What privileges does anyone have (for example, use of a company car)?
5. Strategic management
- How can owners influence decision making in a company?
- Where are the boundaries of the areas of responsibility?
- What issues are within the competence of the owners within the board of directors?
- What is the frequency of meetings?
- What forms of strategic management do we use?
Section Two: Relationships Between Partners
6. Our personal styles and effective collaboration
- Who are we according to the DISC typology?
- Who are we according to the Myers-Briggs typology?
- What is our management style?
- What are their fears?
- What are their strengths?
- What are their weaknesses?
- How best to communicate with each and what means of persuasion to use?
7. Values
- What is important to us now?
- What is important in the long run?
- What is the balance of me-family-work?
- What are everyone's personal values?
- What are our corporate values?
8. Partner interpersonal justice
- What contribution to the business does each of us make?
- What will change over time?
- What partnership and company will give each of us?
9. Expectations of partners
- What do we expect each of each?
- What do we expect from ourselves?
Section Three: The Future of Business and Partnerships
10. Development of rules of conduct in non-standard situations
- What will happen if crazy success comes?
- What happens if there are serious losses?
- What happens if we get an offer to buy a company before the planned valuation?
- What happens if one of us becomes seriously ill?
- What will we do if our partner dies?
- What will we do if one partner enters into an interpersonal conflict with another partner?
- What if the partner has a crisis in the family or family problems?
- What happens if the founder decides to leave the business?
11. Conflict resolution and effective communication
- How will we resolve conflicts?
- Where is the boundary between work conflict and interpersonal conflict?
Before entering into a partnership in a new or existing business, I highly recommend that everyone sit down together and ask each other these or similar questions. Based on the answers, you can create a partnership agreement. Again, this is not a legal document. It will be unique for every business. The questions above are just my example. And remember, communication is key.
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Source: habr.com