A 7-point checklist for a successful business partnership
So, you’ve decided to start a business partnership – awesome. But as you probably know, nothing is ever quite as straightforward as it sounds when business and money are involved. Making sure you put the right structures in place can put you on the path to startup success.
What makes a successful business partnership? Good question. Here are 7 things to consider when starting a partnership business.
How to have a successful business partnership
1. Start with the right partner
Just like marriage, you want to enter a business partnership with the right person. Of course, your partner must be someone you can trust. They should also possess something your business needs but you do not have. That may be money, connections, expertise, or a unique skill set that will allow the business to grow beyond what you can accomplish by yourself.
2. Create a shared mission and vision
The vision and mission statements of any business represent the heartbeat of the business. Therefore it is important that both partners agree on what direction the business should take and what your purpose for existence should be. Creating a clear vision and mission with your partner will help you on the path to success.
3. Set the tone for your business relationship
It is important to define the terms of your professional relationship from the start. Besides agreeing on things like who will be responsible for which functions and how much each partner will invest in the business, be sure you’re in agreement on more subjective things like acceptable behavior and work ethic. And think about the future – if there’s something you won’t accept five years from now, don’t accept it at the start.
4. Check the communication
Free, honest, and extensive communication is a non-negotiable ingredient for any relationship to be a success. You should have no hesitation in freely expressing your opinion, desires, expectations, fears, and frustrations in a partnership. If your and your partner’s communication styles aren’t compatible, the partnership may not succeed.
5. Regularly plan together
It’s called partnership for a reason – you’re in it TOGETHER. And that means you need to plan as a team and decide on things together. When both parties bring their ideas, strength, strategies, and resources together, the result is an enjoyable and productive relationship. A truly strong partnership will generate more ideas than either partner can come up with alone, so don’t hesitate to bounce even the most inconsequential or obscure idea off your partner. Who knows what the two of you will come up with?
6. Create clearly defined job roles
In a partnership, job roles and responsibilities can easily become blurry since both of you are technically bosses. So, at the onset, it is critical to state in writing, the duties and responsibilities of each partner. Review these roles periodically – at least every six months or more if there’s a change in the business like hiring a new employee or landing a big contract. Staying on top of who’s responsible for what will help your business run more smoothly.
7. Have a solid legal agreement in place
A formal partnership agreement is crucial, even if you’re going into business with your best friend or your spouse. An agreement protects both partners and can end a lot of disagreements before they even start.
Below are a few key items that should be in your legal agreement.
Partnership Agreement Checklist
Your business partnership agreement should spell out the following:
• Name of the business
• Type of partnership
• Partners’ information
• Division of ownership between or among the partners if they are more than two
• Are there limited partners? What will be their contribution?
• Dispute resolution
• Sharing of profits and losses
• Who will manage the business? Or is it going to be a shared responsibility?
• What will be done if one partner decides to drop out?
• Are family members allowed to participate in the partnership?
• What happens in the event of the death of a partner?
Answers to all of these points will form your foundational business document. And together with the preceding tips, your business partnership will be set up for success!