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Starting a Business with Multiple Owners

Starting a business with multiple owners is fairly commonplace. If you are not careful, however, it can lead to major problems down the line.

A business is really an idea when you get down to the fundamental aspects of it. While practically everyone wants to make money, businesses are usually started because somebody has an idea. More accurately, it is often because two or more people come up with something they think people will be interested in.

While the collaborative effort is great for thinking out an idea, potential problems and so on, it can ultimately lead to disaster. Ironically, this is particularly true if the business is successful. The problem? Sharing power.

If multiple people start a business, they often refer to it as "our business". At the outset, this isn't really a problem. As time passes, however, each owner may start to have very different ideas about what "our" business should be doing, how it should grow, niches it should get into and so on. When this occurs, "our" business soon becomes "my" business. The problem, of course, is each owner is saying this. Conflict soon follows.

If you start a business with others, it is very important to understand that you are essentially getting married. This is true even if you had the original idea, work harder than they do and so on. Ownership is ownership. Much like a marriage, you should give consideration to the business equivalent of a prenuptial agreement.

At the outset of any business venture with multiple owners, time should be taken to discuss what happens if there are problems. What if someone dies? What if someone stops working? What if a majority of owners want to go in one direction, but one person does not? How will each of these issues be handled? Whatever your decision, it needs to be put in writing. Depending on the structure of your business, it may come in the form of a buy-sell agreement. Regardless, the idea is to make sure you cover these issues up front.

At this point, you might be thinking you really would be uncomfortable discussing these issues. After all, everyone trusts each other, right? Maybe, maybe not. What tends to happen is you find out that maybe some of the owners have some very different ideas than you do. It is always best to find this out before revenues start coming in. Why? People are not eying the business bank account. They will be reasonable in discussing matters. In a worse case scenario, you may not be able to work things out. If that occurs, at least you found out before spending a lot of blood, sweat and tears on the business.

It is common to start a business with more than one business owner. Such businesses often do very well since the workload is shared. To avoid problems, just make sure everyone is on the same page up front and get it in writing!