You’ve got all of the passion and drive to make all your entrepreneurial dreams come true, but it’s critically important to make sure that your business has a solid foundation. That means making sure that you pick the right business structure, getting your partnership agreements in order and lining up your financing.
However, it also means attending to a few other details you may not have had in mind. Here are three things you shouldn’t overlook:
A prenuptial (or post-nuptial) agreement
Once you’ve built your business, you need to protect it from the sort of problems that can arise if your relationship with your spouse falls apart. A prenup or postnup can help you give your partners some security by separating your interest in the business from the marital estate.
That can protect your business from being sold to pay for your divorce settlement or putting your business partners in the uncomfortable position of having to accept your spouse as a partial owner down the line.
Effective estate and succession plans
What do you want to see happen to your business, your employees and your legacy after you are gone? All small business owners should have an estate plan in place so that they can help those who remain behind.
Tax minimization strategies, a will, a buy-sell agreement and a succession plan can help your business thrive for decades to come. The buy-sell agreement is particularly critical because it controls who can buy out your share and under what conditions. That also gives your partners some security in case you’re incapacitated or simply decide to retire.
Life insurance that pays your partners
You probably have life insurance that’s designed to cover your burial costs and provide for your family, but what about your business partners? Coming up with the cash to use that buy-sell agreement can be difficult without putting unnecessary strain on the business itself.
It’s not uncommon for business partners to carry insurance policies on each other for the express purpose of making a buyout easier. That will also provide more for your family’s needs.
Starting a business can be complicated, but don’t get very deep in the process until you consider the steps you need to take to protect the business from an uncertain future event.