Making your business partnership work can be one of the greatest pleasures of having your own business. With that in mind, if you’re planning to start a business venture with a friend, family member or associate as your business partner read on.
Don’t assume that everything will be hunky-dory from day one. After all, business partnerships go through rough patches too, just like marriages. So make sure you take certain steps to ensure yours doesn’t end in heartache and regrets.
How to make business partnerships work
Take the following steps and your business partnership should work from day one:
Share similar values
Check beforehand that you and your business partner share the same vision, dream, goals, etc. A potential conflict where your partner does not share the same goals, core values and work ethic, for example, can spell disaster.
A pre-existing success track record always helps
Play it safe
Choose a partner with whom you’ve had a past success track record and a generally positive business experience. Now, this doesn’t mean that choosing the right partner means having worked before is compulsory or you have to have a share with them in running a business in the past.
It simply means that both of you have a track record of going through similar business experiences successfully. This will help relate to each other’s strengths, weaknesses or, say, limits. Plus, it’s best to look for a partner who can handle conflicts like you can, who has achieved similar goals and survived through rough patches, just like you.
Explain and define each partner’s role within the partnership
This helps to eliminate any potential disagreements, resentments, reservations or conflicts down the line. In fact, by clearly defining each partner’s responsibilities, scope, duties, etc. customers and employees can also benefit. Remember knowing who is responsible for overseeing which aspect of the business is very important.
Choose the appropriate business structure
A business partnership may be forged as a limited liability, limited or general one. However, you may also organise it as a C corporation or S corporation partnership. Each one brings a distinct set of advantages and disadvantages, so talk to your business or financial advisor to determine the right one.
Go with a partner who has a complementary skillset
Having a partner with complementary skills to yours means you can effectively double your strength as a team. For instance, if you’re a generally shy and somewhat introverted tech person looking to start an online business, it would be preferential to choose a partner who has good people, marketing and sales skills.
Be honest with each other
Don’t sweep matters under the rug! you’re both going to hurt the partnership more than anything else. Talk things out openly but respectfully, sharing your opinions openly and honestly, and ironing out disagreements when they occur.
Put everything in writing
Even if your partner happens to be your closest mate from high school, you need to draft the appropriate legal documents and put everything in writing. This is a no brainer!
These legal documents should have everything from the business structure and capital contribution to the business. Also, how decisions will be taken and how disputes will be resolved. Or, for example, what happens if one of the partners suddenly decides to ditch the business and move on. Consult a legal or financial advisor and put everything in there that could possibly go wrong. This way you’ll know exactly how to deal with it, if it ever comes to that.
Some of the above points can certainly be tough to discuss with your partner, especially when you just can’t wait to get the business going. However, you need to lay the foundation for a strong, fruitful and lasting business relationship.
If you don’t you may have to later deal with the heartache of a failed business partnership.
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