When you start a business with a partner, you'll have someone else to help you, motivate you and share the challenges and joys of entrepreneurship. However, if you want your partnership to succeed, here are a few things you must do.
- Put your agreement in writing. Whether you’re forming a partnership, corporation or limited liability company (LLC), you need to take your partnership seriously as a business agreement. (Yes, even if you’re starting a business with your best friend of 20 years or your brother.) Launching a business is stressful, and many partnerships don't end well. But no matter how well you and your partner get along, eventually one of you will want to exit the business, retire or decrease their involvement. Choose the legal form of business that best suits your goals and includes a well-thought-out plan for handling this situation.
- Choose a partner whose skills complement yours. When one partner’s strengths shore up the other’s weaknesses, you'll have a stronger team — and a stronger business. This is why partnerships between very different personalities, such as a "people person" and a solitary number-cruncher, often work so well.
- Stake out your territory. Agreeing on a clear division of labor between partners will keep the two of you from duplicating effort or stepping on each other's toes. As your business grows, this becomes even more important — your employees will need to know which partner is in charge of what. Create written job descriptions for each partner so there's no misunderstanding.
- Agree on your goals. Every pair of partners will have disagreements from time to time. The key is to make sure that you are on the same page when it comes to your vision for your business and your long-term goals. Discuss your personal goals, too: If one partner is happy just to make a salary and the other partner envisions becoming the next Amazon.com, neither of you will be happy.
- Communicate openly. Honesty is vital to a successful business partnership—but too often, partners are reluctant to be completely open with each other, especially when it comes to sensitive issues such as salary, percentage of ownership and division of labor. If you can't be honest with each other, resentment will eventually start to fester and destroy your partnership. Nip problems in the bud by talking about them frankly.
- Plan for tiebreakers. What happens if you and your partner are in complete opposition over a business decision? This happens more often than you think, and it's why you need to plan ahead for how you will resolve a "tie vote." For example, one partner may have 60 percent ownership of the company and the other 40 percent, so the majority owner always has the final say. Or perhaps you'll agree to refer the decision to an outside Board of Directors or a trusted mentor. No matter which option you choose, it's important to have a solution for working through the inevitable stalemates.
By taking a little time before you launch to plan for all the possibilities, you'll have a partnership that can weather the ups and downs of building a business.