by Richard Avdoian
Entrepreneurs, startups and established business owners who want to grow or establish a business may from time to time toy with the idea of entering into a partnership.
Before you jump in headfirst, stop and really think through your reasoning. Start by simply asking yourself, “Why?,” “Why now?” and “Is it worth the risk?”
A business partnership is similar to a marriage. It requires a workable balance of different personalities, values and level of commitment.
Likewise, a divorce is similar to the ending of a partnership. Those involved may begin to seriously dislike each other and have consistent conflicts regarding the degree of commitment and the business struggles.
Often, partnerships are pursued and created because a business owner feels other professionals have something they lack that is key to business success. It could be a particular skill, financial resources or marketing experience.
Ask yourself whether it’s your insecurity or fear that has you considering a partnership. By taking on a partner, you must be willing to give up a percentage of your business and relinquish some authority, money and property.
Pursue a partnership for the right reason at the right time. A viable partnership can be a great pathway to success if you start and remain on the same path. So it is imperative that you identify clearly the key issues that are important to you and what you want to achieve before you seek a like-minded partner.
So, how can you avoid the devastating blow to a partnership?
Consider the following:
Do you share the same personal and professional values, belief structure, and purpose? The more in line and close partners’ values and purpose are, the more likely the company values will be too.
Spend time getting to know the person before engaging in a formal partnership. Witness how they handle themselves in business networking events and while dealing with conflicts and challenges. Do you balance and complement each other?
Major companies that are considering acquiring another company perform thorough due diligence. Why should you be any different? Take the time to review LinkedIn and Facebook. Is your potential partner respected by vendors and clients? Also, do not hesitate to ask for references.
Here are a few considerations to address before deciding to partner and before you meet with an attorney: Do you mutually agree to the following?
• The duties and obligations of each partner, including position titles.
• The ownership percentage of each partner.
• The actual time each will contribute to running the business (set days, hours, amount of vacation).
• A clearly defined exit strategy.
• Established decision-making and conflict-resolution processes.
Once all concerns have been identified and resolved, the last step is to have it all in a formal written document that is signed by both parties. Things do go wrong, so it is wise to secure the services of an attorney to review the agreement and witness the signatures.
Starting with a strong, solid, mutually agreeable foundation will allow the partnership and business to flourish.
Richard Avdoian is president/CEO of the Midwest Business Institute Inc., a business consulting and training firm. For information about training and seminars, contact Richard at 618-972-8588 or Richard@RichardAvdoian.com.
Submitted 2 years 29 days ago