By Dan Boudreau
A business partnership demands the same care and attention needed to nurture and grow a successful marriage. As with a marriage, you are well advised to get to know who you’re setting up shop with before committing to the deal.
Partnerships are not appropriate for every business situation. The first rule of partnering – don’t partner unless there are good reasons to do so. A common misconception by newbies is that a partnership will lighten the workload and put them on easy street. Fact is, with more mouths to feed you might have to work even harder to meet any increased financial obligations.
In spite of the risks, here are a few good reasons why you might want to get into a partnership.
- To share the workload
- To attract someone with skills or knowledge you don’t already have
- To bring more money to the table
- To handle a job or business that is too large for you to manage alone
- To keep up with a rapidly growing business
- To keep a great person on your team by sharing responsibilities and profits
Here are nine rules of the road to keep in mind when initiating any business partnership:
1. Partner with people who have different skills than you, and clarify your respective roles.
2. Define your business vision together and as you grow, discuss and make any changes to that vision as a team.
3. Discuss your expectations of each other and the business, and particularly ensure the business can meet all partners’ financial, career and lifestyle requirements.
4. Assume nothing – communicate often, honestly and openly.
5. Before getting into business together, get to know potential partners well enough to know whether you have compatible values.
6. Research your potential partner’s work and financial history to get familiar with her track record. If a number of her previous engagements have ended in a cloud of law suits and conflict, you can be fairly certain that your planned partnership will too.
7. Negotiate and sign a partnership agreement – use the services of a lawyer to do this.
8. Prior to signing a partnership agreement, ensure that you and any potential partners can effectively resolve conflicts.
9. Be sure to include a shotgun or exit clause in your partnership agreement. Breakup of a partnership can cause disruption or even destroy a business. A shotgun clause can provide a process for a partner to exit in a way that is fair to all parties.
In summary, respect your business and all those involved by having a foolproof partnership agreement. Be honest and open with your partner, communicate often, keep your expectations realistic, and be loyal to each other. These things will go a long way toward building a successful and profitable business partnership.
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