ENTREPRENEUR SPECIAL...Can your spouse be your business partner?

Can your spouse be your business partner? 

Here’s how to protect your finances and your relationship before you take the entrepreneurial plunge.

    Shubhra Chadha was a bored housewife nursing her newborn daughter when she began toying with the idea of making quirky souvenirs. Encouraged by her husband, she launched her venture, Chumbak, in Bangalore, in 2010. Within a year, the business grew so much that she had to scout around for a helping hand. The best offer? Her husband, Vivek Prabhakar, who quit his job at Sun Micro Systems and joined her as a copreneur in 2011.

    Spouses as business partners is not a new concept. For decades, businessmen have designated their wives part owners, but this was mostly done to take advantage of tax loopholes. However, over the past few years, the trend has been changing. The women who quit the workforce to take care of kids at home, don’t want to let their profesional skills rust. Their best option is usually to take the entrepreneurial plunge. Most of them start solo, and when business starts booming, they are joined by their husbands. Says Bharati Jacob, co-founder and partner at Seedfund Advisors: “A recent trend in couple-run ventures shows that it’s often the women who start a company, and the men join in later, after the business starts gaining traction.”

    However, this is not always the case. Sometimes, the spouses brainstorm, come up with a viable idea and decide to set up shop together. Take Thought Blurb, a Mumbai-based advertising agency. An apt example of a ‘copreneurship’, it was set up by Vinod and Razia Kunj, who came up with one of their best ideas in 2007 after riding the corporate carousel for over a decade. They decided to leverage individual strengths—his in the field of advertising, and hers in design—to launch their own advertising agency.

    While there may be plenty of upsides to such an arrangement—both have a mutual understanding of goals and save on hiring an expensive executive—there are several downsides as well. You can, however, overcome these if you follow the guidelines listed below, and ensure matrimonial bliss even as you make your business a success.

    Getting started

    How to save money and energy.

Start slow

Before both of you take the plunge, decide who should quit his/her job first. Avoid leaving together as this could strain your finances. Even moving from a double to a single income will be tough since the business will take time to become profitable. The sensible option is for the person who earns less to quit first. When Manish Sharma and Lalana Zaveri returned to Mumbai from the UK in 2005, they were keen to set up their own business. However, they moved cautiously on the idea. “While I quit my job to devise a business plan, my wife picked up a job at Comart, a print company, so that at least one of us had a regular income to pay for daily expenses,” says Sharma. Zaveri finally joined the business in 2007, when the couple launched Printo, an all-purpose printing store for small businesses, in Bangalore.

    Chadha agrees. “My husband decided to pitch in at Chumbak only after we were sure the business was making enough money for us to take out some to meet our expenses.”

Build a substantial emergency fund

You can’t afford to jeopardise your family’s finances, which is why you need to build a sizeable emergency fund that can take care of exigencies before you decide to start your venture. While the emergency amount for a two-income family is usually worth three months of expenses, in case of copreneurs, it should be at least double this amount. You should also hedge for 2-3 months’ worth of business expenses if a client doesn’t pay on time.

Save rental costs

Another tactic to save cost is to convert a room in your house or garage into an office. In the initial days, you don’t need to rent an expensive office space to impress clients. So, save on rent and use the money to upgrade the equipment and technology that you will require to run the business.

Demarcate duties

To prevent confusion and friction, it’s important to define the responsibilities that each partner will shoulder. Says Apoorva Shah, co-founder, Richfeel Trichology Centre and Spa, which he runs with his wife Sonal Shah: “As copreneurs, you must avoid working on the same aspect of business or you waste energy on duties that often overlap. It’s best if you take care of the areas where you can best leverage your skill set.”

    Understanding risks

    How to handle potential roadblocks.

Funding hurdles

Most venture capitalists (VC) are aggressive investors in start-ups with unique business ideas and growth potential. However, there are very few copreneurships that they have funded. Does this mean that couples starting a business together can face problems when it comes to funding by VCs? Jacob disagrees. “We have no issues funding such ventures if both the partners are professionals in their own spheres and can bring certain skill sets to the company.” However, she is quick to add, “They should also be able to deal with their personal differences and not drag them to work.”

    To avoid the misconception of being a ‘family business’, copreneurs sometimes don’t reveal that they are married, or may exaggerate facts, such as the amount of money they can put in the business. However, hiding the truth can put their VC funding at risk. “The facts usually come out in the second or third round of meetings, and then we become wary of such ventures. A good business relationship is based on trust. So, it’s best to lay down all the facts upfront,” says Jacob.

    Funders are also wary of another arrangement. “This is a partnership involving three people, of whom two are married. In such a case, the working relationship between the married couple and the third partner may be different,” explains Jacob. However, Aakriti Bhargava, who cofounded Boring Brands, a communication and marketing consultancy, with her husband Anshul Sushil, has a different take. “An overlap of personal and professional life can impact business decisions. A third partner acts as a sounding board and can help resolve conflicts in an unbiased manner, whenever required,” she adds.

Divorce, death and disability

These three ‘Ds’ can be dangerous for a copreneurship. Two people can co-exist amiably as a married couple, but they could be totally unsuited as business partners. In fact, small arguments, personal or professional, can escalate to a divorce. This can lead to a legal mess and entail several unpleasant questions, the most important being—will you continue as business partners or shut shop? While chalking out a business plan, take into account such worst-case scenarios. Make a partnership agreement outlining job responsibilities, the profit each will take, how you will handle disputes, and who will have veto power if you lock horns. The agreement would be like a business prenuptial, specifying whether one of you will buy out the other and the one who will inherit the company in the event of divorce or death. Also, since an illness or disability can severely impact the business, make sure to get a disability insurance to cushion your company against hardship.

    Running the business

    How to maintain work-home balance

Equal pay for equal work

Some copreneurs believe that since the money has to come to a single household, only one person needs to draw a salary. However, a relationship develops its biggest cracks around finances. If you’re both putting in an equal amount of work, you should draw the same salary. The Shahs have found their own financial balance for this to deal with this issue. “Both of us take the same quantum of salary, which goes to one joint account. While we use half the money to invest in the company, the balance is used by my wife to run the household,” says Apoorva.

Don’t bring fights to office

Snapping at your partner at work due to an argument at home would be completely unprofessional. Worse, screaming at each other or shifting blame, especially in front of the office team, strains the work atmosphere and affects the productivity of the entire crew. Don’t take your partner for granted and make sure that any criticism is constructive and worded carefully. Says Sharma: “We try very hard that our personal differences do not impact our business.” As partners, you must also ensure that credit and failure are distributed evenly. “Saying ‘please do it for me’ doesn’t work in a professional set-up. We have realised this after two years of working with each other,” says Chadha.

Keeping work, home separate

Are you bringing home your office work and talking business even during dinner? Says Sharma: “We often go back home and keep discussing business points or strategies. Avoiding this is a constant challenge.” Worklife balance is important, as is maintaining discipline. Each couple has a different approach to this issue.

    Shah says that because he and his wife are driven by a similar zeal, they don’t mind bringing work back home. “We drink, eat, breathe Richfeel. That’s the passion we share for the business, though our kids get irritated and annoyed with the constant business talk. However, when we go on a business trip, we make sure that we take some time out for ourselves.” The Shahs should remember that constant talk about work could lead to stress. Simple things like not bringing work home, adhering strictly to work timings and taking days off can help you avoid it.

MILAN SHARMA ET121001