Benjamin Franklin may have said it first: when we fail to plan, we plan to fail.
Most people enter into business and partnerships planning to succeed. In fact, these businesses do all of their planning around success: how will we divide the profits if we succeed this much, or what about this much?
Starting a business is a great time work with an attorney to set up the legal and binding parameters of your contracts and agreements, hoping for the best. But this is also the most important time to plan for the worst.
In fact, more than 90% of startups fail. Even if you are entering an established family business or buying a “secure” business, you must plan not only to succeed but also to fail.
This means creating contracts and agreements that cover what will happen in the worst case scenario. It also involves considering events that you do not want to even imagine happening.
Things do not necessarily go according to plan
Sure, your business could do exceedingly well. In fact, your business could even do so well that it grows too fast, leaving you without the necessary staff and resources to keep up supply and ensure happy customers.
Or the marketplace or economy could take a drastic, unforeseen turn. Have you planned for 1 million unsold widgets?
Marketplace and economy aside, people’s lives also face major changes. Either you or a partner could experience a life event that prompts either or you to make a quick exit from the partnership – what then? Have you decided the value in dollars of sweat equity?
There are myriad events that could negatively affect your business or your partnership. The best way to plan for success is to plan for failure as well. Consult with an experienced business attorney to give your business the best chance for success.