Two Heads Are Better Than One
Ben and Jerry. Jobs and Wozniak. Johnson and Johnson. Everywhere you look, you see the results of successful business partnerships.
It's true that with hard work, dedication, and perseverance, a dedicated solopreneur can build a business up from scratch, but a partnership can change the world. If your company is stuck in second gear, a partner with a different set of skills, a unique world view, and a strong sense of entrepreneurship can help you make a great leap forward.
Business partnerships must be built on a foundation of mutual respect…
Many of the best business partnerships begin with a personal relationship. Sisters, cousins, high school friends—a partnership must be built on a foundation of mutual respect, trust, and admiration, so it should come as no surprise that Ben and Jerry bonded over a shared love of ice cream in the seventh grade, or that Bill Gates and Paul Allen designed and built their first software package, the Altair 8800, in Gates's college dorm room.
But finding the perfect partner is anything but easy, and the road to Microsoft (or Apple, or Google) is littered with the twisted remains of broken relationships. A good business partner shares your vision and enthusiasm, as well as your values, but paradoxically, a great friend can still turn out to be a lousy partner. The moral of the story: Choose your partner wisely.
So how do you find the perfect partner? If you want to find a partner who will enrich, enliven, and diversify your business, then first you need to understand your own strengths and weaknesses. You need to understand your business inside and out, and you need to have a clear idea of your ambitions and your future.
Before you ask your spouse, your best friend, or your brother to join up and help you build the next great corporate empire, I suggest you take a moment to consider the advantages and disadvantages of bringing a partner—any partner—aboard.
The Pros of Forming a Partnership
1. Another Perspective. Successful entrepreneurs are focused and driven, but without another point of view to balance your perspective, you run the risk of developing tunnel vision. Every great leader has faith in their own ideas, but as your business evolves you may find it difficult to make decisions in a vacuum. A partner not only acts as a sounding board, but they also offer novel concepts and strategies that you may never have considered.
2. Networking Opportunities. Networking is fundamental to small business growth. If you have been working by yourself for a few years, then you might feel like your network has been thoroughly exhausted. Bringing on a partner allows to expand your network of contacts, clients, vendors, and investors more or less instantly.
3. Energy Boost. A lot of work goes into building a small business. You need to research your industry, analyze your financial resources, develop and market your product, build a network of contacts, clients, and investors, and manage your day-to-day operations and expenses. Phew! When you work with a partner, you can accomplish a great deal more in a fraction of the time.
And if you choose a partner with a different set of skills, then you are able to efficiently distribute tasks according to your strengths and weaknesses, further conserving time and maximizing productivity.
The Cons of Partnerships
1. Profit Sharing. When you have a business partner, you have to split your profits. This means you need to select a partner whose involvement in the business will increase your revenue sufficiently to justify their share of the wealth. If you are making half as much money after accepting a partner, then you have selected the wrong partner!
2. Disagreements. Inevitably, you and your partner will disagree about something. Hopefully, your disagreements will be trivial (Should you order bagels or donuts for the morning meeting?), but be forewarned: Disagreements between partners can fundamentally disrupt a business. Arguments consume resources, and if you and your partner cannot quickly resolve your dispute, then the fracture might end up tearing your company in two.
When You're Ready to Take on a Partner, Get a Lawyer and Write a Comprehensive Contract
It is absolutely essential that you prepare a written agreement and have it evaluated by an attorney before you and your potential partner sign anything. Your partnership agreement should include a general description of the business, powers, duties, and restrictions of each partner's role, the allocation of profits, and the responsibilities for losses in the event that the business fails or the partnership is dissolved.
You have worked hard to bring your business to the point where you are ready to take on a partner. So make sure that as you move forward you protect yourself, your assets, and your business. Even if your partner is your best friend, there is no telling what the future has in store. Be ready!
Have a great story about the moment you decided to take on your business partner? Why not contribute a blog post to The Self-Employed blog today?