Business partners often venture into business with little or no ground rules at all. Then, they discover that this worked against them when they face certain decisions and power imbalances within the course of running the company. You can clash on things like operations, financiers, marketing and sales, and the like. However, the returns of good partnership can be numerous. Partnership business has a lot of potential if you know how to handle the nitty gritty of entering into one.
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How to Start a Business Partnership
The first consideration of business partnership is to decide whether your planned endeavor needs a partner at all. This is because partnership business is relegated to a certain kind of company where the expertise of the other is needed. For example, your partner may have the right network, finances, or skills that are vital for your success. Once you have established this, then go through the process of setting up the partnership:
- Take time to be acquainted to your potential business partner. It is important that you see his or her personal and professional profile, values, goals, and vision. It is important that you are on the same page on this to avoid professional clash of opinions. This is one of the most common faults of those entering a contract: they did not take time to get to know their potential business partner.
- Test your “working together” by venturing into a small project together. This is to test the waters and see how business partnership can work for both of you. This is your way of getting to know how you operate as individuals and how you cooperate as a partner.
- Have a lawyer draw up the memorandum of agreement of your business partnership. Everything must be drawn in black and white and must be agreed upon by you and your potential partner. This is important in order to avoid any untoward incident that might happen at the course of running the business.
- Lay down your expectations as to where schedules, skills, return of investment and other important factors come in. Agree on day to day operations. Ideally, you complement each other so that your skill can be put to good use.
- Draw out an exit plan. Just in case the partnership business does not work, an exit plan will spell out what are the things you need to do including profit sharing and the like. This can include an agreement, just in case a partner will buy out the other, most especially when your business partner will opt out of the company. Spell out clauses when both do not want to continue with the business at all.
Business Partnership with Friends and Family Members
Be especially careful about entering into partnership business with your spouse, best friend, or any family member. There are a lot of potential risks, most especially when the business falls apart. Deal with the partnership on the professional level. Partnering with your husband or wife can put a lot of pressure between the two of you, and may not provide you with an avenue to exercise private and business relationship.