"WHY IS A 49/51 SPLIT A GOOD IDEA?"

By Dorene Lehavi, PhD.

Especially now, in this uncertain economy and job market, many people are turning to creating their own businesses and many of them are joining with a partner. There are a plethora of good reasons to want a partner. Besides the camaraderie, there is shared risk, more heads to be creative, shared responsibility, complementary skill sets, etc. However, many people who do walk into a partnership ignore doing the basics and find themselves in trouble down the line. That is why more partnerships fail than succeed.

I am passionate about helping businesses succeed. As a former therapist and in my coaching practice, I have learned that it is more often than not, a breakdown of the relationship between the partners that causes the breakup.

This can be avoided by making some important decisions at the outset and writing them down. More importantly, the outcome of these conversations is learning to communicate, openly, honestly and ongoing.

Connecting with the appropriate business partner is very similar to choosing the right marital partner. In fact, it is likely that you will spend more hours with your business partner than your spouse. It is vital to have compatible personalities, values, and a vision of life together for the short and long run.

I guide my clients and others who invest in the helpful tools I created to talk about as many “What If” issues they can think of, and to write down the solutions they prefer and to revisit them at least once a year. One of the most important decisions I encourage them to make at the outset is who will have the deciding vote when there is an impasse or disagreement. That's where the 49/51 comes in.

This division is separate from the financial split. The finances can be split 50/50, 60/40 or any other numbers that are agreed upon. However, a disagreement has to be decided upon by someone. In evaluating the different skill set of the partners, one will hopefully be stronger with actual management. That person, may be chosen to be the decision maker with 51% where the need arises. If, however, the partners do not want to create this split, they may decide to choose an outsider to be the tie-breaker or decision maker in a stalemate.

This person should not be a family member, friend or any person with a vested interest. Name a neutral party. Have all of this written prior to signing the partnership agreement.

The truth is partners can create any solution they want to as long as they don't wait for the crisis to happen before the decision is made. There are a number of very important additional decisions to be discussed and made at the outset. If these are done, the partnership will be off to a good start. Far too many ignore this phase and walk into trouble with no pre thought out solution.