Last Updated Jul 29, 2010 1:17 PM EDT
When Bibby Gignilliat started her first company, her gut told her to go it alone. She loved her idea -- teambuilding through cooking -- and it was a perfect fit for the bubbly culinary-school graduate. Still, she had reservations. "I was afraid to do it solo -- I figured I lacked the necessary business knowledge," she says.
She paired up with a friend from school who seemed to have complementary skills. Later, the two took on another partner because she had business experience -- and a Harvard MBA.
And that's when things started to sour. Looking back now, Gignilliat realizes she should have seen the problems coming and headed them off.
The partnerships devolve
Gignilliat and partner number one opened Gourmet Gatherings in 1999, and took on the third two years later. The initial partner didn't last long -- she moved away and Gignilliat bought her out, giving Gignilliat a two-thirds share of the company.
But Gignilliat and the second partner (we'll call her Nancy) soon started butting heads. Nancy was supposed to run the business operations, but wanted to get more involved in the culinary and pr side -- Gignilliat's strength. "She convinced us to bring her on for her financial expertise, but then didn't want to do finance after all," Gignilliat said. "I didn't need help hiring, developing recipes and dealing with the media -- those were my strong suits."
Then Nancy had two children, and told Gignilliat she wanted to work only 10 hours a week. Gignilliat -- who doesn't have kids -- took on more and more of the workload and wasn't happy about it. She thinks the issue wasn't Nancy's growing family, but her unwillingness to put in the hours appropriate for a partner.
"I know plenty of women who work full time with families," Gignilliat says. "The business was my livelihood, but it was a hobby for her. She wanted all the glamour -- we got on the Today show, which she loved -- but if a chef, server or dishwasher did not show upon a Saturday, she didn't want to deal with it."
Gignilliat began to feel the relationship was holding her back from expanding the business -- so in 2006 she decided to buy Nancy out.
"It was so scary to confront her," she says. "I knew she didn't want to be bought out. I can picture the conversation to this day. I tried to keep it professional, not personal: I told her I was ready to be the full owner of this company."
Playing her trump card
The conversation didn't produce the desired results. The women couldn't agree about how to establish a buyout price, and their LLC agreement -- "boilerplate," Gignilliat says -- wasn't any help. It directed each party to find an appraiser -- but Nancy wanted to use her father, and there was nothing in the agreement to stop her.
Ultimately, Gignilliat played her trump card: She dissolved the company, her prerogative as two-thirds owner, and reopened the next day under a new name: Parties That Cook.
Her gambit paid off. Parties That Cook generated $503,000 in revenues its first year, 75 percent higher than the old company had produced the year before. In 2007, the company's sales hit $1.4 million; this year, it's on track to bring in $1.9 million. The company now has six full-time employees and 70 field contractors.
"I was free!" says Gignilliat. "Free to finally focus on running the business. Once I was able to do that, the business flourished."
Gignilliat says she could have saved a lot of time, money, and heartache if she entered the partnerships more carefully. She wishes she had engaged in frank, detailed conversations with each prospective partner -- defining each person's expectations about how they'd handle the balance between work and home life, maternity leave, buyouts, division of labor and other issues. And she knows now that each party should have had her own lawyer review the LLC agreement.
With the benefit of hindsight, she realizes she didn't need a partner at all. "You can use contract workers and consultants to provide complementary skills -- you don't have to give up a chunk of your business," she says. Gignilliat herself hired an HR consultant to help her navigate the process of hiring Parties That Cook's first employee.
"Don't enter a partnership lightly," Gignilliat says. "It's like a marriage: It takes a lot of work and should be entered into very seriously or not at all. After what I've been through, I'd say not at all!"
Bibby Gignilliat started her first business at age 10, finding and reselling lost golf balls. She hopes to retire early and travel for a while -- and then will probably start another business.