Entering into a business partnership is an exciting time, but there is a great deal at stake. “What ifs” abound. What if something goes wrong? What if you cannot agree? Are there ways to limit the likelihood of a potentially devastating dispute between you and your partner? Absolutely. Almost all partnership disputes come down to poor planning or unclear boundaries. The best way to prevent future conflict is to resolve hot-button issues now with clearly articulated business roles and goals.
Your guide to a fair and equitable partnership
- All partners should sign an operating agreement. It’s crucial to know the responsibilities, benefits and challenges to come before you commit fully to anything. Do not quit your day job, move house or take other drastic action before an operating agreement has been agreed upon and signed.
- Hire a personal attorney to represent your interests in negotiations. Your partner will likely do the same, and this is entirely normal. If possible, have your legal representatives draw up the afore-mentioned operating agreement together to ensure that it is legally binding. Invest in legal counsel now so that you do not have to litigate later.
- Discuss potential challenges and outcomes. It is wise to confer with your partner on how you would handle any worst-case scenarios. This is the best way to get on the same page. What if you have a falling out? Can one partner oust the other? What if the business flops? Discuss all potential outcomes to prepare for all future scenarios.
- Remember that you can walk away from a bad deal. If you can’t get through preliminary negotiations, a partnership with this individual may not be a good idea. Walk away before you invest any more time, money or brainpower.
- Craft a values agreement. You and your partner must agree on matters of business ethics and philosophy. Who will have the final say on what matters? How will you approach marketing and money? Discuss these issues and any other relevant details until you feel confident about moving forward.
- Pick the right partner. While this may seem obvious, perhaps it is not. Beware of choosing a partner that is too similar to yourself as you will likely have the same strengths and skills. Instead, you should seek a partnership with someone whose skills complement your own and with whom you can collaborate with ease.
- Choose cooperation over competition. A partnership is about running a successful business and should provide equitable benefits for both of you. In other words, your contract needs to have shared responsibility and shared rewards. Cooperation and compromise are vital parts of every partnership.
It does not matter whether you are just entering a partnership or have been involved in a joint venture for some time. Take these tips and apply them now to foster renewed communication and future success in your organization.