Building a Business Partnership
Key Points of Partnering with Someone in a Business Venture
Sep 11, 2008 Cash Justin Miller
Sometimes in business an entrepreneur or potential business owner might find themselves in a position of having to consider whether to take on a partner or not. The reasons for considering a partnership with someone else will vary. Maybe you don’t want to take on all the risk yourself. Possibly you have the know how to make the business a success but lack the financial means to get it started. Or it could be the other way around and someone else has the knowledge but you have the money. Whatever the reason may be you need to be careful when choosing your partner. Because if the business is to become a success you will most likely have to work closely together for a great many years to come.
Why Build Partnerships
Often partnerships are formed because of circumstances. Usually it is the result of two friends and an idea. Maybe they were college roommates, friends from childhood, or co-workers. However it came about it usually will involve two people that already know each other well. This will not always be the case but it does happen often. The problem with friends becoming partners is that a business often will test the strength of a partnership unmercifully. And if it does then it will also end up testing that friendship as well.
Key Considertions of Entrepreneurial Partnerships
There are of course many things to consider in any business partnership. Compatibility would be one of the most important aspects to think over. Whether you think you can work with a particular person day in and day out. How are they about money issues and making the big decisions? All businesses require good decision making skills. Can you trust them to make important decisions when you are gone? Are your business philosophies radically different or similar in many ways? Partners will inevitably argue a lot about many different things but if your goals for the business are the same then conflict resolution can be much easier.
Partnerships Need Equal Commitment
Another issue that often comes up between partners is the division of work. Just like in any other work environment one person may often end up doing more work than someone else. If this happens between partners you can often have a feeling of resentment develop on the part of one partner towards the other. Both partners must make an equal commitment if they want the business to be successful. The responsibilities of each should be mapped out as much as possible. And all important decisions that will need to be made should be discussed in detail so that each partner has a say in the development of the business.
Ownership Shouldn't Necessarily Be Equal
Finally, if possible one partner should own 51% of the business and the other 49%. This is because equal partnerships often do not work out. Someone needs to have the final say or you could become deadlocked constantly if you disagree a lot about the way things should be done. Unequal partnerships allow for a decision to be made even if someone ends up unhappy. Partnerships are not an ideal way for forming a business so if you must do so then these are some of the things you need to consider before you become committed.
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