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Question added to topic Grow Your BusinessFebruary 5, 2008

What is the best way to break off a partnership in a small business if I want to keep the clients that I have worked so hard to obtain?

My business partner has no money on the equity into the business and seems to go on vacation every time a big job comes up and expects to still be paid as a partner. Lately, I have had to resolve issues that could have bankrupt me and were caused by stupid mistakes that my partner has been equally trained on and continues to disregard. Her inappropriate behavior with vendors is starting to mar my integrity and professional reputation. This has become a very unequal partnership.
  1. First, talk to an attorney you can trust. The legal aspects around this kind of a thing are dangerous waters. For other readers of this answer, that's why you're supposed to have a buy-sell agreement that foresees breaking this partnership up, before you get involved. You have to be careful.
  2. Partners should be paid salary for what they work and share in profits only if there are profits. Your compensation structure seems way off. You should take a fair share of the jobs you sell and fulfill way before it becomes profits. Pay yourself fairly.
  3. Your clients will want to go with you if you've worked hard to win their business. They don't want your partner unless she's there, working. Your accumulated work will help you a whole lot. Just make sure you get good legal advice about how to avoid the pitfalls.
Tim Berry is the president of Palo Alto Software Inc., based in Eugene, Ore., which produces business planning software. He is also the author of 3 Weeks to Startup and The Plan-As-You-Go Business Plan, published by Entrepreneur Press.

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