This may seem an odd thing to do, but when putting an agreement together with another person or business, it is vital to think of what could possibly go wrong. In most instances of entrepreneurs setting up in business, they are usually doing so with a family member or best friend. Thoughts of them doing a runner or not pulling their weight will most likely not cross anyone’s minds. Nine times out of ten, people proceed with no agreement at all and this is a big mistake.
Just think of an airline pilot. They spend hours in a simulator, rehearsing every possible scenario both good and bad. The worst scenarios are the most valuable and in the recent tragic helicopter crash off Aberdeen, it was said that it was thanks to the pilots skills, that not more had died. He too will have rehearsed complete engine failure. If he hadn’t, it could have been a lot worse.
Large business have entire disaster recovery plans where they put mechanisms in place should the entire office be wiped out due to a natural disaster or there be a simple electrical failure eg hospitals. Small businesses should do the same.
I know it is not nice to think about things going wrong. Even if your family member or best friend stay loyal and hard working to the end, they may be subject to events beyond their control such as illness or the pitter patter of tiny feet or their other half moving jobs to another part of the country… My advice is to grasp the nettle and when entering into any kind of arrangement, have a contract in writing which sets out not only all of the positive elements of who will do what, but also all of the worst case scenarios. That way, if they should happen, you will be prepared. Best still, pick up the phone to your lawyer and let them guide you and prepare an agreement tailored to your needs.
To get you thinking, look out for our forthcoming tips on “should the worst happen”.
Tags: Simulating disaster