When two people want to do business, both sides must agree to a set of terms within which they can work together fairly. That is easy to accept, but understand that “fairness” is not an exact point but a range of acceptable considerations. If you think of it otherwise — as something too precise — you risk disappointing your business partner and/or yourself when untalked-about problems arise.
In my experience, the best way to establish fairness as a range is to identify the principle that you can both agree is applicable to the particular business situation. For example, “We are both going to put into the business assets of equal value, including financial assets, and we therefore expect to get out of it rewards of equal value.” You don’t need to put this into the contract. (Some lawyers might tell you not to.) But some roughly correct statement of intention clearly laid out in a simple memo can be very helpful in straightening out messes later on.
The important thing is to create — in your own mind — a range of fairness. That way, if, somewhere down the road, your business partner takes a somewhat different view of the way things are working out, you will be mentally prepared to be liberal in your thinking. The reason you want to be liberal in your thinking is that business skirmishes between partners can be as nasty as divorce settlements. It’s much better to give more, fight less, and have the energy to go on and make more money.
Establishing an overriding principle of fairness and creating a range of fair considerations in your mind are two very good ways of avoiding future blowups. Prepared thusly, you will be able to settle uncomfortable disputes more quickly, with less unhealthy stress and, ultimately, with less cost to your wealth-building plans — even if you settle at the farthest edge of your range.
Sometimes They Go Beyond Reasonable
But what do you do if your negotiating partner is being completely unreasonable — if he won’t even agree to step into the far end of your range? First, you make sure you’re not the one who is being unreasonable. Do that by consulting with people who are not involved in the deal — and not afraid to tell you that you are wrong. If you’re convinced that he’s the one who’s the jackass, turn the situation over to a tough lawyer.
However, set strict limits on:
* how much time you will devote to it per week
* how many weeks your lawyer has to settle it
* how much money you are willing to invest in it
Do that and — ultimately — be prepared to settle outside of what is fair. I sometimes imagine getting into fights with business partners who have screwed me. I imagine myself being tough, even ruthless — sometimes calling on some of my old, unpleasant friends to settle the score. That feels good for a certain amount of time. But doing it turns out to be a very different story. Enormous, gut-eating stress. An escalation of ancillary problems. Huge financial cost. And a diversion from everything that makes life enjoyable.