Making your business partnership work can be daunting if you have never had a partnership. If you intend to start a partnership with a friend or a family member, you should consider many things. Do not assume that just because you get along in a personal relationship you will have success in a business partnership. Adhering to a few simple steps will ensure that you have the best experience in any business partnerships you decide to have. Read on to find out how to keep your business from suffering heartaches when forming partnerships.
Align your values
One of the fundamental steps in ensuring that you have a successful partnership is to have the same starting point. Specifically, this means that you need to have similar values. Sit down with your potential candidate for the partnership and discuss the overall vision of your business.
For example, see that you have similar (or the same) answers to these questions:
- Where do you see the business going?
- What are the dreams and goals of the business?
You must establish the key goals, values, work ethics, and environment in order to have the best business.
Do not assume that things will work themselves out. If you find that you have substantially different values and goals, consider a different partnership.
Although it is true that everything will go through rough times, you should not choose to have a business that has to adjust itself from the start. Just imagine all the challenges that will pose and how it will make life difficult for you and your partner.
Partners should work towards an overall established goal. They should not have to determine what goal that may be.
Choose wisely who to form a business partnership with
One of the key tips for effective business partnerships is that you look for the right business partner for you. Because in business, you want to have someone with a pre-existing track record. It is a business and there need to be business credentials, which will establish them as being an asset to your venture.
Look for someone who has a record of establishing and maintaining a small to medium-sized business effectively.
When you have your sit-down interview with the candidate:
- see what their strengths and weaknesses are,
- find out why their previous partnership ended, and evaluate whether this could be an issue,
- address how the person handles conflicts and negativity – this is crucial.
All of the above are elements that will paint a clearer picture. Because every day will not be an ideal day. In fact, most days will require a problem to be handled and a viable solution to be presented. Conflict and solutions should be handled in a way which is agreed upon by both sides. This will reduce disappointments to a minimum, or at least to the degree that you can handle. And it will also prevent conflicts between the partners in the long run.
Know your responsibilities
Perhaps the biggest hurdle that you will have to overcome in a partnership is the delegation of power and responsibility.
Before you enter a partnership, you must establish who is doing what in the business. This will minimize any differences of opinion as to the authority and final say in business matters.
Put the roles in writing. If you don’t, you will run things based on verbal agreements about responsibilities. As a result, there could be potential disagreements, increase of resentment, and conflicts.
Delegate the roles and responsibilities of every person involved in the business. It’s best practice to start with the CEOs and work your way down the hierarchy until all parts of your business have been defined. Doing so, will not only do you keep the roles and the responsibilities clarified for those working for you, but you make it easy for partners to have a clear mind as to what is expected from them and you.
Know what type of business partnership you desire
When you form a business partnership, you need to know what type of business you wish for it. What it essentially means is, knowing if you are forming an LLC (limited liability company), a limited business, or a general one. You could also have a C corporation or an S corporation. Each of these has their own set of guidelines and stipulations. Knowing what these regulations are and how each business needs to be planned is mandatory for any venture. For if you cannot define what your business is about, how can you expect your partner to?
Bonus tip: Talk to your business and financial advisor to find out which business is right for you.
Make it legal
Even the closest family member or friend should not be given the benefit of the doubt for a business. Everything should be in writing. In addition, all documents should be reviewed by a legal professional to ensure that both of the parties represented (yourself and the partner) understand the roles and the responsibilities of the role.
Make a contingency plan
Worst-case scenarios are definitely worth paying attention to. So, when establishing legal documentation for the business, address them. While you do not want to have any bad things happen to your partnership, having a contingency plan in place is fundamental to a partnership and will establish the steps to take should things go wrong.
Check out this video for more clarity on these effective business partnership tips.
Effective business partnerships: conclusion
These tips for effective business partnerships are the start. Address any concerns that you have about your business prior to starting. It is better to plan than to compensate later in your business relationship.
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