What to Know before Going into Business Partnership

Partnerships can be wonderful, but they can also become your worst nightmare. Use math to choose the right partners. That`s right, mathematics. If one plus one equals two, this is not the right partnership for you. One plus one must be three! A partnership must be more than the sum of its parts; Otherwise, you might as well outsource different parts of your business. When looking for a business partner, it`s important to look beyond a person`s resume. These entrepreneurs – and the members of The Oracles – share their hard-earned wisdom about what to look for before teaming up with a business partner. When considering potential financial contributions, keep in mind that cash in advance is not the only or even the most common form of financial contribution a partner can make. You can look for an external investor or take out a business loan to finance your business. As a small business partner, this is another decision you need to make together.

Ironically, you should enter the partnership knowing that it will probably end one day. Therefore, you should describe the flexible steps for partners to leave the partnership if a need or circumstance arises. So grab your notebook and get ready for some tough questions. You won`t want to skip these must-have 23 before you start your partnership with small businesses! When you feel the stress of starting a new business, it`s easy to assume that your partner isn`t doing well. To avoid growing resentment, set clear and objective performance indicators to measure each of your contributions from the outset. This way, if either of you doesn`t live up to expectations, you can have a balanced conversation based on facts rather than feelings. May these 23 essential questions guide you to become a rewarding joint venture. If, after careful analysis, you have decided that you need to have partners, you should consider partners who complement your personality and skills, but also bring something else to the table and are passionate about business growth and success. Consider the pros and cons of a partner in terms of business, industry, and finances. Even the best business partnerships probably won`t last forever and when the time comes to end the partnership, emotions are likely to be strong. So decide how to handle the dissolution of the partnership from the beginning, when both parties are in a neutral place. Alexis agreed, saying it`s helpful to consider why you and your partner want to own a business together.

“It`s a red flag for me when someone wants the image or wealth of a company,” he said. “I want to work with someone who has a similar passion for mission.” Take the time to discuss the different scenarios that might occur and how you would handle them. This will give you the best chance of ending your partnership amicably and in the way best suited to the business. It`s a good idea to gather as much information as possible when preparing for a business partnership, but ultimately, your best source of information is your own intuition. “You have to listen to your instincts,” Diamond said. However, determining from the outset whether you need a partner and how the partnership will work in terms of compensation, exit clauses, roles and responsibilities will give you a solid overall framework for a successful partnership and allow you to focus on your business. One of the biggest mistakes you can make in partnership is not sufficiently clarifying each other`s roles, boundaries, compensation, and exit strategies, and then documenting them on paper. While it`s important to trust yourself, it`s also important to make sure you`re clearly on the same page before you start. People often have different understandings and interpretations if they are not codified in writing. Jack Canfield, co-founder of the Chicken Soup for the Soul franchise, author of the NYT bestseller The Success Principles and CEO of The Canfield Training Group 1.

A written partnership agreement. Partners must be prepared to document an agreement. A written agreement may not be a legal requirement in your state, but a well-drafted partnership agreement can not only isolate you from issues of personal responsibility, but also force you to think about how you and your partner(s) will achieve the implementation of your entrepreneurial vision. The partners should be able to resolve any problems that arise by referring to the agreement. In the absence of an agreement, the differences are resolved by your state`s general partnership law, which undoubtedly does not cover the intricacies of your business partnership. If a small business partnership is actually like a marriage, consider this process as your prenuptial advice. The more effort you put into reflecting and discussing your perspective on these issues, the more fruitful your long-term business partnership is likely to be. All my success can be attributed to fruitful partnerships: co-author of the chicken soup for the Soul series with Mark Victor Hansen; The principles of success with Janet Switzer; and the management of my businesses with Patty Aubery and Russ Kamalski. My two most important criteria for partnerships are: First of all, I have to love them and trust the person. Second, they have to bring something that I can`t afford. Loving and trusting them are subjective things, but I`ve learned to trust my instincts.

If something goes wrong, I don`t continue. Insurance is one of the things entrepreneurs get when they start their business and then forget how their businesses are. The biggest mistake I ever made with the partnership was starting a business with three other partners. Too many cooks have spoiled the broth, you might say. I thought a number of personalities and opinions were good, but it created too many conflicts, egos, obstacles and slowed everything down. The perfect scenario is two to three partners, but four seemed too many. — James Swanwick, CEO of Swanwick Sleep and the 30-Day No Alcohol Challenge Having different talents and areas of expertise not only enhances your company`s growth potential, but can also prevent conflict or competition between you and your partner. Because if you work on different fields of activity, you will not step on each other`s toes. It should be obvious that you and your small business partner both intend to obey the law in your business relationships, but not every decision you will face will be ethically black and white. Your personal values will, of course, determine your business decision-making, so aligning values is critical to your relationship with your small business partner. Consider doing a values exercise together to find out what`s most important to you and determine if your standards and priorities align well.

Why is a partnership structure beneficial for your business? Will the benefits of a small business partner be worth the complications and negotiations involved? Keep in mind that the fear of doing it alone is not a good reason to partner with small businesses. Make sure that the choice of this business structure matches your long-term interests. The biggest mistake you can make with the partnership is going too fast. .

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