5.X — When There Are Two of You #
Partnerships are usually formed in optimism and dissolved in conflict. The conflict is almost always financial — not because the partners are dishonest, but because they never had the financial conversation the partnership required before they opened the doors.
That conversation has to cover five things.
Draws. Who takes what, when, and under what conditions. Not “we’ll figure it out as we go.” A documented draw structure agreed to before the business opens — tied to what the business can actually support, not to whoever needs money this month.
P&L transparency. Both partners read the same numbers, with the same frequency, interpreted the same way. A partnership where one partner runs the floor and one handles the books, and the floor partner is handed a summary once a month, is not a partnership. It is a principal-agent relationship with shared liability.
Reinvestment vs. distribution. One partner wants to take the money. The other wants to put it back in. Neither is wrong — but without a written policy for when the business distributes and when it reinvests, that disagreement will surface at the worst possible time.
Capital calls. What happens when the business needs more money? Who contributes, in what proportion, on what timeline? The partner who can’t meet a capital call has a problem. The partnership with no documented answer has a bigger one.
The buy-sell agreement. If you have a partner and you do not have a buy-sell agreement, you have a serious legal and financial exposure most operators don’t discover until they’re in the middle of it. The buy-sell agreement defines what happens when one partner wants out — how the business is valued, how the departing partner is compensated, on what timeline. Without it, a partner who wants to leave can effectively hold the business hostage.
Write all of it down before you open. Not after the first conflict. Before.
