"Top 5 Maxims about Business Partners and Money" by Nina L. Kaufman, Esq.
/They say that "love is blind," and that often applies to women entrepreneurs in taking on a business partner. They become so enamored with the prospect of working with a partner that they lose sight of whether this person makes business sense. A successful business partnership has to address both things: partnership and business. As a woman business owner, and advisor to many more, here are the top 5 things to keep in mind about money . . . and partners:
1. If you're not earning enough, get out. If you and your partner can't afford to live on what the business generates, you may have to face that what you're doing, how you're doing it, or those with whom you're doing it isn't working.
2. Corollary to #1: Know your needs as they grow and change. When I had started an earlier business, I was single. By the time it ended, I was married and actively trying to get pregnant. These changes in lifestyle also changed my perspective on work, available time, and income needed.
3. Become financially literate. If you're reading this, literacy isn't an issue. But few of us are taught to read numbers and financial statements. Pay close attention to P&L reports and balance sheets - and seek outside guidance to fully understand what they tell you. Not looking at them is tantamount to sticking your fingers in your ears and singing "la-la-la" as loudly as possible to avoid facing whether your business partnership makes sound financial sense.
4. Don't let friendship obscure business. This is an Achilles heel for many women business owners. We want to be able to nurture a friend/business partner through tough times. It's in our nature. But when the nurturing takes on a financial dimension (say, a business partner wants to take more than her fair share out of the business), you have to set boundaries. Otherwise, you risk foregoing your salary, dipping into credit lines, or suffering an unfair tax burden.
5. Uncover your partners' "money mindsets." How do your partners handle their personal finances? Are they in debt? Have they ever filed for bankruptcy protection? Do they pay their creditors timely? These are clues to how they will handle financial dealings with you. How do your partners talk about money? Are they optimistic and prosperity-conscious? Or is there an undercurrent of "I'll never make it"? One of my former partner's favorite phrases was "I'm so broke, I can't pay attention." It took me quite a few years to realize how that mindset influenced everything she did.
Business partnerships are like marriages. Money is the main reason they break up. So be absolutely sure that you and your partners share the same attitudes toward money and financial goals. Because at some point, a business partnership has to be about business to be profitable.