In the beginning of any business, there always comes a point where a decision will be made whether to take on a partner or run the business solo. In the early stages, opportunities can be fatal if important questions are overlooked because of all the excitement. Partnering may be an idea because of finances or because someone has skill in an area you lack. It’s important to go into your venture with eyes wide open. Partnerships can be rewarding with up front open communication. If you already have a partner already, its still worth sitting down and discussing some hard questions with them. Weigh all options by considering these six important issues.
1. How you handle your personal finances
Personal finances can affect the business, so it is important to know how you and your partner handle your money. If there is a lifestyle change with one business partner, there will be tension in wanting to take more money out of the business. Set clear, precise percentages or dollar amounts with the amount of salary each of you will take out. Only enter into business with someone that has control of their personal finances.
2. Keeping your personal and professional relationship clear
Having a personal relationship with your business partner before hand can make things confusing. Each person needs to be cautious about communicating with one another. State when a conversation is going to be business related or a personal conversation. Don’t manipulate the personal relationship with business. Be clear, conscious, and precise when communicating.
3. Will either one of you want to exit or buy out the other
This will need to be discussed in the beginning. If one partner would want to buy out the other, how much would it cost? Under what conditions would you be willing to sell? One partner will often be ready and eager to sell when the other is not. There needs to be an up-front discussion under what conditions the selling or buyout will happen. Write down and sign to avoid unneeded tension in the business. Plan the exit before you begin to make when and how to sell seamless.
4. What are your expectations on how things will run?
There are unspoken expectations you need to discuss such as how much each of you will be paid and how you will exit. You need to bring all the unspoken things to light. This includes what each other’s role will be in the company. You may have a higher energy level than your partner. Is there an expectation of the number of hours each person will work? Set expectations up front to have a fruitful partnership.
5. What is your vision for the future?
We often jump into a business and never discuss what will happen if the business explodes, so planning for success is very important. You and your partner need to have the same vision of success. If one partner wants to expand and the other is satisfied with the current position, you will have a problem. Make sure your vision aligns before entering into a partnership.
6. Your lives will become intertwined
In a healthy partnership you will become close with your partner. Every action that you make towards the business will affect the other. This will bring you closer to each other when the business is thriving. Someone is there with you to grieve losses and to celebrate victory. Your business partner will become family and you will be united in life with them. Making the choice to take on a business partner or not is a tough choice. Always make sure to write things down so that you will always be moving forward. Continue the journey knowing that your personal life and business are never completely separate. There is no such thing as a silent partner. Define up front, take time on the front end, and save heartbreak and frustration on the backside. Move with clear communication and it will be the start of a fruitful partnership for years to come.