How to Create a Strong Business Partnership - dummies

How to Create a Strong Business Partnership

A partnership is when two or more people team up in the ownership and operation of a business. When a partnership works, the business will run like a well-played symphony. When it doesn’t, things will more likely be closer to a scene from the film Titanic (specifically, that part where the ship sinks).

Ensure that your partnership operates smoothly:

  • Date first (metaphorically, of course). Just like in a romantic situation, you should get to know your prospective partner very well before you tie the business knot. Consider doing shared marketing or a specific project together first.

  • Partner only with someone you trust. Trust is the glue that holds a partnership together and allows you to achieve great things. The road to business success is littered with broken partnerships that fell apart as soon as the trust that kept them together vanished.

  • Don’t partner until you can stand on your own. You should partner from a position of strength, not weakness. Otherwise, your business will become a codependency and, thus, dysfunctional.

  • Enlist partners who add to the business. Ideally, your partner will complement you and bring positive personal value to the company. Choose partners to cover the skills or connections that you lack.

  • Share the equity (and the burden of risk). Sharing equity means sharing ownership of the company with your partners. But if you agree to share ownership of your company, be sure to require partners to share equally in the risks associated with the business.

  • Create a written partnership agreement. Formalize your partnership in a written agreement that spells out — clearly and unambiguously — the ownership stake of each partner, rights to business proceeds, and his or her responsibilities to the business.

More than a few friendships, families, and personal relationships have been destroyed by business partnerships gone bad. Partners can clash in a variety of ways in a business environment under the pressures of a busy schedule. Always apply the same standards of care when you decide to partner with family or friends as you would when hiring a stranger.