Why every business needs a shareholder or partnership agreement from day one

Starting in 2020, a martial arts expert and a software developer went into business together selling online martial arts courses. One created the content, the other built the website, ran the platforms, and managed the finances. The business grew to roughly $22,000 a month by the end of 2025. Then the relationship broke down.

The dispute that followed came down to the most basic questions a partnership can face. Who owns the content? Who owns the website, the accounts, and the subscribers, all of which were registered in one partner’s name? Can one partner force the business to be wound up? The partners had operated on a handshake since 2020 and only signed a written agreement in March 2025, a three-page document prepared without a lawyer. They now cannot agree on what that agreement was even meant to do. The court has not resolved any of it yet, only whether to freeze matters in place while the underlying dispute is determined later, at considerably greater cost.

This is how these disputes usually begin. Founders start with trust and momentum, and a written agreement can feel unnecessary, even awkward, like planning for a failure no one expects. But circumstances change. Once one partner wants to leave, push through a major decision, or simply stops contributing, the question of what was actually agreed becomes the most important and most expensive question in the business, and by then it is too late to answer it cheaply.

A shareholder or partnership agreement is not a sign that you expect the venture to fail. It is evidence that you have thought carefully, while everyone is still aligned and the stakes are low, about how the business runs, who owns what, and what happens if things change. The time to have that conversation is at the start, not years later through costly litigation.