So you have established you want to split the risk of owning a business with a partner. Assuming you chose well and that the relationship between your two parties is clearly outlined, a business partnership will very likely galvanise your company’s success.
In one of our previous posts, we looked closely into the pros and cons of entering a business partnership, as well as the desirable traits your business partner should have.
is that person going to bring to the table in terms of skills, expertise, and assets – and is a partnership the only way you can get access to those resources? More importantly, will he or she deliver exactly what you need?
First and foremost, keep in mind that entering a partnership is a business decision. The fact that you like someone as a person is not a guarantee that your partnership will be a sound idea, or that your friendship will stop any disagreements from happening..
That is not to say, however, that liking the other person is not an important prerequisite for the success of the rapport. As entrepreneur Patrick Hull shares for Forbes: “Among the most helpful tips that I’ve discovered is making sure that you get along with your business partner. It’s important to find someone who complements your skills, but don’t underestimate the importance liking one another.”
You should venture into a business partnership only in the following scenarios:
- When you have a great idea for a startup, but don’t have enough resources at your disposal.
Launching your own business is a serious undertaking in terms of investment, so it’s only natural to want to find a trusted ally who is going to share the financial burden with you. Once you pool your financial resources, the idea will gain more leverage and potential investors in your business will deem you more reliable.
Just keep in mind the following: It’s important to check that your future business partner doesn’t have any unresolved personal financial issues, as these can creep their way into your business relationship.
- When their unique sets of skills could add significant value to the company.
A business partnership should be a complementary relationship, in which your weak points are counteracted with your partner’s strong points and vice versa. The importance of a mutual benefit is often overlooked in this type of agreement, yet it’s one of the most important conditions for the health of the partnership.
In so many instances, a particular business will fail simply because the owner doesn’t possess enough business acumen or marketing skills – regardless of the fact that its product or service may be a state-of-the-art one. Similarly, there are fantastic salesmen without the right product or service to sell; ones who have not yet had the right opportunity to put their skills and knowledge at work.
In addition to this benefit, a good partnership dynamic can result in better ideas, fruitful brainstorming sessions, and make you push each other to always blaze the trail. Not to mention you’ll always keep one another in check!
- When you don’t feel like taking all the risks and responsibilities on your own.
One of the best ways to manage the risks involved with starting and running your own business (and to buffer the negative effects, in case things start going awry!) is to team up with a reliable business partner. It may not be inspirational to think about negative outcomes of your business endeavours right from the start, but it is a possibility. The whole prospect will seem much less daunting if you have a trustworthy sidekick who’s willing to share an equal portion of the risks and responsibilities that inevitably come with entrepreneurship.
- When you have clearly set out all rules and obligations
No matter how much you like and trust your business partner, don’t underestimate the importance of a written agreement outlining the order of things. Have an attorney draft a contract which clearly states each of the partner’s rules and responsibilities, both towards one another and the company.
It’s extremely important to do so, especially if things start going downhill. Of course, you should enter a business commitment with enthusiasm, optimism, and eagerness to work hard to make it succeed, but sometimes, things don’t work out. It is for this reason there should always be an exit strategy in place.