6 things to remember before going into a business partnership
Starting a business partnership can be tricky if you don’t plan ahead. Here are a few tips that can help you in your journey.
A professional partnership is, in many ways, an invaluable tool to help business leaders. For example, it can minimize risk, utilize specific skills, or ensure the burden is shared.
Still, it’s critical that anybody looking to enter a partnership with a like-minded individual or even an old friend must bear some of the following in mind.
Have an agreement and exit strategy in place
In reality, the situation is that you are entering into a legal partnership, and it is essential that you go into it with your eyes open.
The legalities are critical, and as much as you would love to get started with the role of running the business.
It is vital that, whether you are looking to form a limited company or a partnership, everybody’s roles are clearly delineated and how the ownership split occurs.
Partnerships can fall apart, so having clarity at the outset is crucial. Moreover, partnerships can fall apart due to personal differences, and it can be easy to assume that the other respects your needs.
This can help absolve any blame, which always makes for a bitter and acrimonious fallout.
Ensuring your values align
Many people go into business for their own personal reasons. This is why your values must align when forming a business partnership.
You both must be singing from the same hymn sheet, which is why having the same goals is critical.
It sounds very simple, but many people go into business because they want their needs met and think the other person will easily fit in with them, but not the other way around.
Choosing the right individual is not just about how you complement them and they work with you but about ensuring that your values and goals align and that you are both looking for the same outcomes.
A partnership is like a marriage because if you are not aligned at the very outset, there will be problems further down the line.
Therefore, you’ve got to be honest with each other and look at your long-term vision of the business because if you are not crystal clear at this point, the company will struggle.
Moreover, you will not see eye to eye further down the line. It’s critical to discuss potential problems before they become real ones.
Define roles and responsibilities
Many companies love getting to work and making alterations along the way.
Still, you must clearly define each partner’s roles and responsibilities, whatever type of business you operate, even if it’s in the creative sector.
Many organizations have benefited from a fast and loose approach to roles and responsibilities, such as startups in their embryonic stages.
However, the problem with this is that as the business scales up and the business comes into greater focus, it is critical to minimize disagreements and conflicts where possible.
The same applies to you and your business partner, just as if you would hire an employee to do a specific set of roles.
Know them well
You are entering into an agreement that is not just about the legal or the financial, but the personal as well.
Therefore, you can talk about having a strictly professional relationship, but it is worth nothing if you don’t get to grips with each other.
Additionally, you must understand who your partner is because you will deal with intimate, professional practices, like legalities and finances.
A lot of people can view complying with specific rules and regulations merely as lip service, something that needs to be barely touched upon.
Still, your partnership is the foundation of the entire organization.
Ensure you know each other properly, not just in terms of your business dealings but outside the work environment.
Therefore, this means that you can have that chemistry where you bounce off each other and work together to recognize where you can help them, and they can help you.
Try it out
Before you commit to a business partnership, it’s always a good idea to see if you can work together effectively.
Many people are so consumed by looking for the perfect partner that they will overlook so many of the other person’s flaws because they are hoping to get into running a business.
You’ve got to do the “try before you buy” setup to ensure that you complement each other in every single way.
Spending time, not just nailing down the finite components of the plans, but working together for a period of weeks (or preferably months) will ensure that you get a good feeling for each other.
We can never underestimate that gut instinct. We may think we have hit gold dust with our business idea and are starting together well regarding our roles and responsibilities.
Still, if that fundamental partnership is not working for whatever reason, this will cause major problems further down the line.
Is it a scalable relationship?
It’s critical to not just think about skills and professional relationships if you can scale this partnership over time.
It’s not just about the two of you because when you start to build up a business, you will have to hire more people, and you will need to recognize that it’s not just about the two of you anymore.
You will need to make the working environment a great place for your employees, and they cannot feel like they’re treading on eggshells when you are having a falling out.
You’ve got to ask yourself if this partnership is scalable because you may be on the same page now, but you may find that your goals change over time.
You have to ask yourself hard questions before joining a business partnership.
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