6 Things to Consider Before Starting a Business Partnership!

Business Partnership

The idea of starting a business partnership can be very exciting. It allows you to utilize complementary talents and shared resources. Diving into this endeavor also means a lesser financial burden as you can share this responsibility with your partner. 

However, business partnerships aren’t all good as there are several cons to this setup. For one, working with a partner will prevent you from making decisions on your own. Any decisions you make, whether big or small, should be consulted and approved by your partner first and vice versa.

If you’re planning to start a business partnership, think about the information below.

Consider these tips before saying ‘I do’ to a business partner so you can assess if this setup works for you. 

1. Ensure That You Have Similar Values

Before you start looking for business partnership ideas, assess whether you and your partner share similar values. This doesn’t mean that you have to agree on everything but keep in mind that having too many disagreements can be detrimental to the growth and survival of the business. 

A business partnership works like marriage. You need to share similar values in order to make the relationship thrive. What are the values you both look for in a partner?  How will you resolve your differences in terms of opinion and vision for the company? 

The more aligned your values are, the easier it’ll be for the two of you to develop and implement strategies to accomplish your plans. Having similar values can translate to lesser disagreements and better professional relationship. 

2. Set Clear Expectations And Roles

Starting a business partnership without any idea of your roles is already a failure. Before you start a business partnership, set clear expectations and roles first. 

You and your partner should have an in-depth understanding of your roles and how these would impact the business. In this way, both of you can determine if the partnership is an ideal business setup. 

What if you’ll shoulder more than half of the investment but the profit will be divided equally, are you willing to sign the deal? Remember, business partnerships should always be mutual in terms of obligations as well as benefits.

3. Actions Speak Louder Than Words

In the business industry, you’ll come across individuals with great ideas. These people are often very convincing and will talk about how their ideas are different and essential to the long-term success of a company. However, talk doesn’t build businesses, only hard work does. 

Before saying ‘yes’ to any business proposal, take note of your partner’s actions. For example, if your partner told you that he’d look into materials about Angie’s list review to determine its legitimacy, assess if he walks the talk. 

It’s important for any relationship to have trust and confidence, but we must also learn to evaluate our actions. Remember that commitment is the sum of our efforts in order to achieve a goal. 

And regardless of how minor the task is, your partner should show commitment to put in hard work. Partnering with someone who’s great with words but lacks action can cause problems eventually. 

4.  Dig Deep About Your Partner

Aside from being a great friend, what else do you know about your partner? What skills or experience does your partner have that can contribute to the success of the partnership? What are the most favorable and least favorable qualities of your partner?

For your business partnership to succeed, be diligent and research more about your partner. This is an important step as the information you acquire can define your expectation towards your business partner.

You can ask your partner’s former boss or colleague about his work ethic, leadership style, or how he handles pressure. You’ll be surprised at what you can uncover during the process. 

5. Assess If Your Partner Can Be Your Tennis Partner

If your partner passed your research and is ready to take on equal roles in the business, assess how well your personalities match. A business partnership means working with someone for long hours, and this task can be stressful if you end up working with someone who clashes with your personality. 

Experts use a tennis metaphor in choosing business partners. Basically, you need to ask yourself if you’ll pick your business partner to play doubles with. This concept simply translates to ‘does your partner’s strength balance your weakness? Can the two of you communicate well with each other? How are you going to evaluate each other?

6. Outline How You Will Manage Business Finances

The goal of any partnership is to earn profits long-term, which is why it’s crucial to come up with a plan on how the two of you will manage finances. Statistics show that one of the reasons why many business partnerships fail is because one or both parties aren’t transparent when it comes to finances. 

Make sure to talk to your partner about money right from the start. Ideally, you should never start a business partnership unless you have a better sense of how the finances will be managed.

Make sure to discuss the following with your partner:

  • Do you and your partner have the same stand on debt? If yes, what are the indicators to consider and how can the two of you pay off loans?
  • How much is your starting capital? How do you divide the equity?
  • How will the two of you manage the finances in the long run? What are your defined roles?
  • Once the business generates profit, are you going to take out your salary? How long should the profit solely be used for the daily operations and expansion of the business?

Never Make Hasty Decisions

Just because the idea of working with a friend excites you, you should never dive into a business partnership on the spot. Starting a business is a time-consuming yet worthy endeavor but making hasty decisions will only do more harm than good. 

Before you establish a business with your partner, try to implement the tips presented in this article first. Use the information here as your guide to assess whether starting a business partnership is a smart decision.

Business partnership article and permission to publish here provided by Claire Glassman. Originally written for Supply Chain Game Changer and published on December 3, 2021.