Whether your business is just starting out or currently booming, the idea of a partnership may have crossed your mind more than once.
And why not? The offer of shared work and responsibilities is attractive.
That being said, there are a few, very important things that you need to define before you take the partnership plunge.
5 Things to Discuss Before Deciding on a Partnership
1 – Define Your Partner’s Role
Dream up your ideal partnership situation. Imagine what your new partner would do and how often you’d be interacting. A partnership implies a 50/50 split, is that what you intend in terms of workload, finances, gains and losses?
By drafting the ideal situation in your head first, you can work your way backwards from your perfect blueprint. This is an easier process rather than starting from scratch and building toward something/someone that is undefined.
2 – Determine Needs and What is Lacking
No single person is a master of all things business. A good business partner should have skills that either support or complement your own. Your goal is to gain a level of strength as a combination that you could not have necessarily reached remaining solo.
If you have great customer service skills but are weak at money management, consider a partner that has the main qualities the business needs and a firm grasp on finances too. When determining your ideal partner, look for characteristics that in some cases are your weakest and biggest flaws.
3 – Interview the Professional and the Person
Even though this merge is a professional matter, it is personal too. As the solo entrepreneur your business thus far has been built on your blood, sweat and tears; no matter how much you want to have a clear separation, letting another person take stock in your business is an extremely personal experience.
Does his/her life have stability outside of the professional realm? What are his/her morals and ethics in business and in life; can you align yourself with them? Does he/she have enough passion needed to do this job; is your chemistry a match? Determine what characteristic are nonnegotiable for you and listen to your gut.
4 – Prepare for Conflict
Before you sign on the dotted line and long before you experience your first conflict as partners, you and your candidate need to discuss plans for how decisions will be made and conflicts will be resolved.
Determine who will make what decisions, and how each of you will continue to respect one another when inevitable issues arise. Define what type of emotional climate you want to set, and discuss how you two will stay in open communication.
Whatever you decide, don’t let casual commitments take the place of formal documents that draw out conflict resolution procedures and agreements in black and white.
5 – Protect and Plan for Life
Cover your bases legally by having your partner contract reviewed by both a lawyer and an accountant. You’ll want to determine what, if any, intellectual property needs to be accessed before the actual merger.
It’s also important to plan for the unexpected, in this case determine what will happen if one partner wants out or if one passes away. Discuss a buy/sell agreement option; agree upon how stock will be divided and how it will be bought in the case of an untimely death. Consider life insurance for you and your partner as well.
You Can Make It Work
With careful considerations you can take on a successful business partnership. Don’t be afraid to have these necessary conversations first; it’s the only way to make a sound decision that considers the well-being of you, your new partner and the future of your business.
What have been your partnership experiences? Have you been disappointed in how things turned out? What steps have you missed in the past that could have helped your partnership work better? I would love to hear your thoughts!
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- 10 Skills for Mapping Your Journey to Partnership (aicpa.org)
- The Secret to a Successsful, Strategic Partnership – Vetter Blair (vetterblair.wordpress.com)
- 11 Things to Look For In Your Startup Partner (under30ceo.com)