IT IS not easy starting a business. More so doing it all alone, taking all the risks and bearing all the expenses.
That is why more and more entrepreneurs are going into business partnerships. They are aware of the benefits that are on the table such as having more ideas to volley around, allowing brainstorming activities that produce clearer decisions.
Partnerships also distribute the risks and costs while making more capital available for the business. When in good credit standing, partners bring higher borrowing capacity.
However, like any business deal, partnership needs careful planning and deliberation. Especially in our culture, partnership is more than just about business. We usually partner with people we trust. And the closer we are to the person we plan to have a business partnership with, the more we have to consider a lot of factors before making a final decision.
In an online article of The Wall Street Journal, there are a number of questions to answer as you consider the partnership set up:
*Do you really need a partner?
*Is your partner critical to the overall success of the company? *Can he bring something significant (connections, financial resources, vital skills) that cannot be done by any other business set up?
*Do you and your partner share personal and professional values, ideas and goals?
*Do you trust your partner’s motivations and character?
*In what areas of everyday life and business do you agree?
*What if a spouse or kid later wants to join the business?
*How will it be handled if one partner acts unethically?
*What if one partner wants to move out of the country?
The business partnership has to thrive in a transparent environment. A lot of partnerships flounder along the way because important things have not been discussed from the onset of the planning stage.
Leadership styles, life goals, and value system should be thoroughly discussed from the very beginning.
“Every agreement should address three crucial areas: compensation, exit clauses, and roles and responsibilities. Include who owns what percentage of the business, who is investing what, where the money is coming from, and how and when partners will be paid.” (guides.wsj.com)
The closer you are personally to your business partner, the more professionalism should be injected into the arrangement. Both parties should be educated and mature enough to accept the fact that laying it all out in writing and legalizing documents and transactions will eventually be the saving grace of the business.
When communication is clear, avenues for frustrations and anger brought about by unclear expectations can be avoided. How each partner would play his role in the business should be defined and though there may be some changes as the company grows, the core strength of the partners would be respected and given due consideration.