With the possible exception of immediate family, a business partnership can turn into the longest-lasting relationship of your adult life. It’s not something you want to take for granted. It’s also something you’ll want to take some pains to make work. While there is no recipe for business partnership success, you can take steps to avoid common problems.
Define Your Roles
You and your partner both have strengths, aptitudes and preferences. Your respective responsibilities should reflect those attributes. For example, if you’re good with people, it stands to reason that client relations and client acquisition will be your responsibility. If your partner is good with supply chains, he or she will probably be in charge of logistics. Once you define these roles, however, you need to respect them.
Talk about the Money
Discussing money makes many people uncomfortable. Unfortunately, money allocation is often a sticking point in business partnerships. You need to move past that discomfort and have a frank discussion about where, when and how you’ll allocate money. Areas to consider include compensation structures, how much to fold back into the business, and even entertainment budgets. Review these annually or even twice yearly to make sure you and your partner are still on the same page.
Choose Someone with Shared Values
You’ll be spending a lot of time, not to mention making a financial investment, in your business partner. This should be someone with similar values in terms of leadership and business goals. For example, if you want to build a company based on social responsibility, you don’t want to choose a partner who is only in it for the money. Dissimilar values will lead to constant conflict in a situation where some conflict is already inevitable.
One of the worst situations you can find yourself in is when one partner takes the other to court. Business litigation inside the business is the nuclear option. You should set up a formal series of steps to resolve conflicts. For example, you can build monthly meetings into the partnership agreement. Other steps could include mediation and arbitration. Another option is to give a neutral third party a small ownership share for the express purpose of breaking deadlocks.
Get It in Writing
Many partnerships start with oral agreements, but that’s a losing long-term strategy. You and your partner cannot honestly expect to remember every feature of the agreement ten years down the road. Creating a formal partnership agreement that details the minutia of the deal protects everyone involved. It is something you can both refer to when sticking points crop up.
A business partnership, like any relationship, requires maintenance. You need to figure out the division of labor and resource allocation, establish conflict resolution procedures, and get things in writing. By having the hard discussions up front, you’ve gone a long way to making sure the partnership can last.