There are many good reasons to bring a partner into your business. It may be as simple as the desire to collaborate with a colleague, or the need for additional financing, a particular skill set you don’t have, or other resources. Creating a partnership can be a fruitful way to grow your business, but to create a healthy partnership that endures, we suggest you consider the following:
1. A shared “vision” for your business is critical and matters in very concrete ways. A vision is a clear, specific, focused articulation of exactly what success means to you. Productivity, time, and financial loss can be significant if a business vision is not clearly stated and agreed upon by all potential partners.
2. Define the resources and relative value of those that each partner brings to the business, such as money, office or retail space, equipment, time, energy, contacts etc. Also clearly define the proportion of profits to be distributed and/or invested back into the business. Think about what you want to put into the business and what you will take out.
3. Articulate clear roles and responsibilities for each partner. It is as important for each partner have a fair share of the grunt work and the engaging, stimulating work.
4. Establish an effective means of regular communication, such as in-person meetings, emails, prompt responses to emails, telephone calls.
5. Set up a process for making decisions. Does everything need to be agreed upon? If so, what is the process for making decisions? If not, which things can be decided without agreement?
6. Examine whether there is a balance of process and styles, including working styles. Is one partner thoughtful, impulsive, somewhere in between, creative, controlling, detail or big picture oriented, and can you work with that?
7. Create a written Partnership Agreement. Make sure it includes how new partners come into the business, and how existing partners can leave. Deal directly with the “what ifs”. Partners do not need to be equal. Put it in writing!
8. Assume there will be conflict. You need to communicate with your partners. State the issue and solve the problem. Some people have a hard time confronting problems, but you need to talk about it if you want a healthy partnership. Sometimes, you may have to simply agree to disagree. That doesn’t mean your business will dissolve. You can find other solutions.
9. Bring in a neutral third party to help you resolve conflict if you want your partnership to endure.
10. Consult with your tax and legal advisor. Creating a partnership has both legal and tax implications.
Tell us about your partnership successes and your partnership disasters. We would love to hear your story!