Planning the Lifecycle

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This blog has focused on the break up of small businesses.  If you search "small business breakup" on the Internet, you will find lots of advice on planning and setting up your company so that a path for break up is established.  If you and your partner are on divergent paths, that advice is not helpful.  Not at all.

Past posts here have discussed the process of breaking up, including advice on gathering all of the business information, bank accounts, loans, payroll, customer lists, vendor lists, whatever your company may have, before talking with your partner about breaking up the business.  Earlier posts have discussed approaches to discussing the break up.  Even if your formation documents are a mess, you can break up your company without destroying your life.

But what comes next?  You may choose to run the business on your own or, if your partner bought you out, you may choose to start a new venture.  If you start a new venture, spending some time thinking about its lifecycle and planning your approach might be worthwhile.

The lifecycle of a small business starts with its formation.  A business can be an unincorporated sole proprietorship, essentially identified as the person who owns it.  It can be a limited liability company (an "LLC") or a corporation (and there are different types of corporations).  You may choose to run it as a non-profit organization, which raises a completely different set of questions.

After you form your business, you have to decide how to fund operations.  Toward that end, you want to spend some time on projections.  You want to know how long it will take to reach profitability.  Investors and lenders will want to know how you expect make them whole.

Speaking of investors and lenders, you will have to decide whether you want to give up part of your company for investment.  You may decide to take on a partner who invests cash in your business.  With break up experience under your belt, you will document that relationship carefully.

Alternatively, you could take commercial loans, keep ownership of your company, and repay the money borrowed.  You might look into the US Small Business Association's grant and loan programs for more favorable terms.

This blog has expanded its focus so that we can discuss issues that come up along the way in running a small business, so that you may plan.  From time to time, we may discuss break up issues, and I am always available to discuss your specific situation.


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