It won’t surprise you to hear that, for every group of folks that takes positive steps to start a brewery, a certain percentage never end up launching. There are countless reasons for abandoned business plans. Life happens, after all. More often than not, however, struggles in the start-up days are due to the same sorts of struggles that crop up in already-operating businesses: tension among the folks behind the business because of differing viewpoints about how to move forward. For the operating business, however, these sorts of tensions are easy to get past because there are formal rules in place for how decisions get made. Indeed, that operating agreement is the sort of document we regularly put together for clients, as we help them choose a corporate structure and prime their business to attract investors to get the business rolling.
But, many start-ups aren’t ready to take those formal steps just yet. They’re just not quite there. Still, no matter how well you get along with your future partners, some of the wisest start-ups (and the ones that tend to make it to launch) are the ones who put some rules and agreements in place before too many decisions get made. An agreement among founders will look different for every group that puts one together. It doesn’t necessarily have to be a formal thing, although Reiser Legal and other beer attorneys are available to help you start the process, whether formal or not. Whatever your preliminary agreement contains, it can go a long way toward uniting the team—and even preventing the possibility of fallout by devising up-front plans to avoid spats. These sorts of agreements can help lay out who does what and set forth how early decisions will get made. It’s no surprise that the best time to come to an agreement is when everyone’s getting along, before emotions ever get mixed in. You might think that you and your best friends will never reach an impasse, but starting a business can be filled with fear and frustration, even if it’s taking you all closer toward your dream.
Here are just a small handful of questions you might ask your co-founders, in thinking about putting an agreement together. Sometimes, just asking the questions and coming to agreement in advance, even if it’s not in writing, can go a long way toward getting collective momentum going in your favor. Of course, depending on how many steps you’re taking up front before formally incorporating, it may be wise and offer the best protection for everyone by putting pen to paper and formally agreeing to agree.
- How will we make preliminary decisions, even about designing our corporate structure? Do we need to be unanimous? How much of a majority?
- When we need to put in some up-front money to get things done, how will we account for that? Who’s in charge of keeping those records?
- What if something comes up and one of us can’t move forward with the plan or just doesn’t want to? What if that person has put money into some preliminary steps? What if, when leaving, that person or group wants to open up a different brewery in town?
- Whose name will our intent-to-use trademark be in, in the event we’re not incorporated when we want to get it? Will that person be required to release the name to the rest of us if they don’t want to move forward with the rest of us?
- What happens to our planned recipes, brewery name, preliminary artwork, and so forth, should our team disband before launching?
Most start-up teams have agreed on the personality of the brewery they want to start, and have a growth plan for the business itself, knowing exactly what kind of brewery they want to be to best position for success. That’s why the group has come together in the first place. But, to increase your odds of being that success story, we find that start-ups really can be set up for the best by taking the time to plan for the worst.