One of the ways of developing your business and expanding it into greater productivity, brand building and levels of success, is to find someone who shares your vision and values to partner with you. Sometimes such a partnership is purely monetary, but real partnership means someone who works with you on a day-to-day basis, helping to carry the workload, and share responsibilities and plans for the future.
With this in mind, your business partner should be someone you know reasonably well, and with whom you feel a sense of compatibility, friendship, and shared purpose. Or so one would think. However, there are many cases of people becoming partners on the slenderest of acquaintance and the arrangement subsequently coming to an end further down the line – often on an acrimonious note. Just like any relationship, business partners need to trust one another and be prepared to compromise.
Tips to make your partnership work successfully.
A business partnership is a legal written agreement between two or more individuals or companies. Partners are expected to invest their money in the business, and therefore benefit from any profits, but must also be prepared to sustain losses in equal measure.
Make sure your partner has the right skills
This doesn’t mean that he or she knows ‘something’ about your business, but that they can bring complementary skills to your own. You may be good at the marketing, but you need someone who can oversee the accounting and administration. This gives you each opportunity to work on what you are good at and what you enjoy – which can create powerful impetus for your business.
This is tricky because it’s hard to truly assess what another person is thinking. So you will have to discuss your vision and goals for your business at length to make sure you are both on the same page. Sharing the same values is vital; goals and work ethic are so important for the success of your partnership; you must be sure your prospective associate really does understand what you envision for your business, not only in the present but also how you intend to develop the business in the future. Partnership means you should both be in it for the long haul.
Commit to a business plan
This is another tricky area, because you should both invest time and thought to your plan. Generally, the plan will have to be revised if you have already set your business up on your own, and you’re taking on a partner after having established your business for a few years.
The value of experience
Whilst your prospective partner may not have worked in a business partnership before, what does count is whether he or she has an understanding of business operations in general. If you have worked together before, this could be a big plus, but it’s not essential. What does count is a track record of succeeding at the various challenges business can present, such as conflict, recruitment, management, technology and productivity.
The written agreement
Apart from having a business plan, you will also need to draw up a legal agreement between yourself and your partner. This will outline and clarify financial contributions, responsibility structures, how you will handle decision-making, disputes, and succession planning. Having a formal structure crystallises your relationship with your partner and gives you a road map of how to contain conflict and deal with problems.
Honesty and trust
You need to know your partner well enough to air grievances and disagreements. Both must feel comfortable sharing opinions without accusations and bitterness, which can destroy your business really quickly. Take the time to lay the foundation for a lasting business partnership. This is an essential step to set the benchmark for interactions, support and aspirations for the future.
Types of partners
- Partners may be individuals, groups of individuals, companies, and corporations.
- Any partnership agreement must be formulated with an experienced attorney.
- Different people sometimes have different understandings and interpretations, so it is important to document agreements where roles are clarified and operational boundaries set.
- General partners and limited partners: General partners participate in managing the partnership and often have liability for partnership debts and obligations. Limited partners invest but do not participate in management.
- A partnership agreement clarifies the relationship between the partners, including financial contributions, how decision-making will be allocated, how disputes will be resolved, and how various situations will be handled, as well as responsibilities and shares in profits and losses.
- Know the partner you plan to set up shop with, for at least a year. And be prepared for the fact that a partnership may not work out. It’s on paper, not set in stone, and can be a year-by-year commitment. If you eventually don’t get along, then don’t force it – there may be somebody else out there who is more suited to your type of partnership and vision.
Trust and values go together, but people can change over time, so be aware that loyalty can have its limits. Overall, most partnerships can benefit a business and provide lasting relationships that help to turn profits for years to come.