From Climbing Partners to Business Partners: A Guide to Operating Agreements

Summary

Starting a business with a partner is exciting, but just like any outdoor adventure, it requires the right tools and a solid plan. At Basecamp Legal, we help entrepreneurs protect their partnerships and businesses with thoughtfully crafted Operating Agreements—because strong foundations build lasting success.

We’ve seen it countless times: two friends, connected by their love of the outdoors, spot a gap in the market. Maybe it’s a new bike suspension design that would smooth out those gnarly descents, or perhaps it’s a service that would make outdoor adventures more accessible. Whatever sparked your entrepreneurial spirit, that initial excitement of starting a business with someone who shares your passion is incredibly powerful. But you wouldn’t start a challenging climb or head into the backcountry without proper gear and a clear plan with your partner, right? It goes the same with business partnerships: like any serious outdoor expedition, you need to plan for both good weather and storms. And that’s where an Operating Agreement comes in for an LLC, or a Shareholder Agreement for a Corporation. Think of it as your route map and emergency plan combined. It might seem unnecessary when you and your partner are enthusiastically sketching out product designs over coffee, but it’s precisely during these positive times that you should establish your ground rules.

Essential Elements of Your Operating  Agreement

1. Corporate Governance

Your operating agreement should clearly define whether members or a manager has the power to make decisions (sometimes we need to add a line for who holds how much power). Just as you wouldn’t want both climbers reaching for the same hold, you need to know who’s accountable for what in your business.  For example, who can sign a lease? Who gives the green light for a marketing campaign? Who can sell the business? Having these conversations early prevents confusion and conflict later.

2. Financial Framework

Next, consider the financial structure. How are profits shared? What happens if the business needs more capital? Will one partner be putting in more money or sweat equity than the other? These discussions might feel awkward now, but they’re far more uncomfortable when there’s actual money on the table.

3. Exit Strategies and Conflict Resolution

Last but not least, you should plan for the worst-case scenarios. What if one partner wants to exit? What happens if someone becomes unable to contribute? How will you resolve serious disagreements? Like having a bail-out route when conditions turn dangerous, these contingency plans are crucial.

Protecting Your Partnership

We’ve seen too many friendships ruined because business partners didn’t have these conversations early on. The strongest partnerships we’ve witnessed are those that took the time to establish clear guidelines while their relationship was solid and positive. A business venture without proper legal foundation doesn’t just risk your company; it can permanently damage a valuable friendship.

Taking the Next Step

At Basecamp Legal, we understand the unique dynamics of the outdoor industry and the world of startups. We’ve helped countless entrepreneurs protect both their business interests and their friendships through thoughtfully crafted partnership agreements. Don’t wait until you’re in a tough spot to figure it out because the devil is in the details. Ready to protect your business adventure? Let’s talk about creating an agreement that gives you the confidence to focus on what really matters – building something amazing with someone you trust. Contact us here [link to contact page] to learn more about how we can help secure your business partnership, so you can get back to focusing on your next big idea!

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