Considering a Business Partnership with someone else? Here are some do’s and don’t's
- Think about who you are going into business with. How well do you know them? Do you trust them? If the business goes south, or there is a large disagreement – is the person you have a relationship with someone that you can’t stand to lose? Things aren’t always going to be perfect, and it’s not always easy to keep business and personal feeling separate. If you are going into business with someone other than your spouse, make sure you look at what could happen. A lot of partnerships that start out as a close personal relationship/friendship have ended in shambles because of business differences, even when neither one of them would have seen in coming. Always weigh the options.
- Make sure you share the same vision. You have differing ideas, sure – you are two different people, but make sure the company’s core values are the same across the board.
- Clear lines need to be drawn. Make sure that you have the same understanding of what your roles are going to be, and what is expected of both (or all of you). Do you own the business 50/50? Or is one of you more accountable for the business than the other (ex. 70/30). What amount of money are you both expected to put down?
- Roles. What are your strong points? Is one of you better at social media, blogging, and PR kinds of things? Is the other better with accounting and finances? Figure these things out so you both are doing what you are best at.
- Communication. Although you will have different roles, you both need to be in the loop all of the time about the business, you both need access to financials and social media – roles aren’t black and white, they will blur – that’s OK, it’s necessary.
- Get things in writing. This is HUGE. No matter how much you trust someone, cover both of your butts. Put your ownership percentages, monetary commitments in writing – that way if things do go south – neither one of you are totally out.
An Existing Business – Joining in the Partnership.
- Find out information yourself, don’t just believe everything you are told. Look at legal documents – if someone tells you they have been in business for 7 years, it doesn’t mean they have. They might have been in the industry for 7 years – but this business may have just been incorporated months ago.
- Look at financials. Just because you are told the business is flourishing – look at the financials. You need to know what is coming in – what is going out, and all the details in between. Remember a business partnership is similar to a marriage – once you become an owner, you are liable.
- Investment – is it monetary or sweat equity? Are you required to put money down or are unpaid hours (which happens more often than not as an own) your contribution to the company? What does this mean if you leave the company – will you get any monetary means back of value with unpaid hours or are you at a loss?
- Company History. We touched on financials and company establishment – but look at other things you may not think to look at. One thing is company turn-over – how many other owners have their been in this company? How long did they stay? Why did they leave?
- How well do you know the person you are going into business with? You might not know them well – but how are their business ethics? Are they consistent? Is the potential partner good at calling you when they say they will, and doing things they are supposed to? Spend some time with the person getting to know about the business, about their goals for the business, how they get leads, etc.
- Figure out what’s expected of you by the other owner. If you own 10% of the company, are you still expected to give it 100% of you attention and time? What percentage of the work is expected to be yours?
- Set boundaries early. Make your boundaries known upfront so you don’t end up walked all over. If you don’t work Sundays – say it. Is your work day between the hours of 8am to 6pm? Make it known! Make sure you set personal boundaries so you aren’t being asked to do things at 10:00 pm, that can actually wait until the next day.
- And again – like mentioned in the first segment – get things in writing.
Every partnership is different, and it depends on the business and the personalities involved. Although joining a new business or starting a new business can be extremely exciting, make sure you have all the important details before you are involved in a business-type marriage.