Experienced entrepreneurs will tell you that great businesses are founded on great partnerships. These same experts will be the first to admit that great businesses can also be destroyed by bad partnerships.
Because of the uncertain business climate, more people are deciding to pool their talents and go into business together. But because partnerships fail and businesses crumble all the time, there are things you need to know before going into this type of business relationship.
By knowing what to expect, you can choose the right business partner, reduce the risk of failure, and work towards the best results.
Done correctly, a partnership is an unstoppable force that can bring several advantages to a business. From shared resources to complementary talents, a solid partnership brings many benefits that can ensure a company’s survival and help it thrive in a competitive industry.
What You Need to Know About Getting Into a Business Partnership
You can build a partnership with anyone, but if you want your business to do well, you need to find the right partner. The first step in building an effective partnership is identifying the best person for the job. Savvy entrepreneurs use various strategies to make sure that every business partnership is a match made in heaven.
Ideally, you want to work with someone you’ve known for at least one year. Similar to dating, you want to get to know a person before committing to something more serious. Think of a business partnership as a marriage. You won’t marry someone you barely know.
If it’s possible to work with someone on a smaller project just to see how it goes, do so. If the projects don’t work out, move on. This way, you will see if you can work well together.
Having Complementary Skills
You want your partnership to be more than the sum of its parts. Look for a partner who is better than you at certain things—someone who brings something to the table that you can’t do yourself. Don’t let ego get in the way of a great partnership. Some people can’t stand it when someone is smarter than them or better at something. But when it comes to business, having complementary skill sets will take your company to new heights.
Here at Kennected, we have multiple partners, but they all have different roles and skills. Devin is the CEO, Cody is in charge of sales, Brandon handles operations, Elliot works on marketing and video creation, and Stephen manages website branding and content marketing. Everything works smoothly because we all bring something different to the table, and we all work for the growth of Kennected.
Developing a Vision
In addition to being able to work well together, business partners need to have a similar vision. You can’t have different goals if you’re working on the same business. You need to be one coherent unit, working towards a particular goal. Discuss with your partner how you envision the business and how it will grow over five or more years. Iron out the details, compromise whenever necessary, and make sure you are on the same page.
How many hours a week do you want to dedicate to the business? What staff do you want to hire? What are your end goals?
One of the main benefits of going into a business partnership is being able to share your resources. This is especially important during the startup phase, where you are both trying to get the business off the ground. A partnership reduces the financial impact of launching a startup, because there are two or more people investing on the business.
Just make sure to put everything on paper: a poorly written and researched general partnership agreement can open you up to personal liability issues. Hire an experienced lawyer to help form your company.
Getting it all on Paper
Documentation is the lifeblood of business partnerships. Like certain marriages, businesses require a pre-nup. The reality is that many partnerships eventually break up. When you and your partner decide to go your separate ways, you need to know exactly what will happen to the company. Prepare for that scenario by having a document that outlines what happens when one or more people leave. This way, you can handle this difficult situation in a way that you both agree on.
Another thing you want to discuss with your partner and document on paper is each other’s specific roles, boundaries, compensation, and exit strategies. While it’s important to trust each other, it is also important that you are on the same page before you start. Sometimes people have different understandings and interpretations if they are not put into writing.
Decide from the outset the responsibilities each player will have, how you will resolve disagreements, and who should serve as a mediator when settling issues.
Building a Fun Relationship
Lastly, you need to have a little fun. Successful businesses are built on passion and the excitement of building something worthwhile. If your gut tells you that a person is not the right partner for this endeavor, then you might want to look for someone else. Business partnerships are a long-term commitment. It’s going to become a part of your life, and you will inevitably go through various ups and downs.
If you can go on this adventure with someone you can trust and someone you can have fun with, the journey would be much easier.