Partnerships are a wonderful thing in business! Having a fellow entrepreneur who shares your vision and goals, someone there to back you up when you need it and someone there that shares your sense of excitement and dedication to changing the world! All is great and wonderful. Well….at least for awhile.
One day you wake up and wonder what in the world were you thinking? That wonderful partner now is the pain in the side you cannot get rid of. Their spouse/partner is always butting in with advice and they are always taking those long vacations, leaving you to manage the shop. This all could have been avoided if you had a strong partnership agreement when you began working together. Things you should consider include, but are not limited to, the following:
– Job Descriptions-yes, you may both know how to run the business, but you need to determine who is really responsible for what. From paying bills to selecting vendors and hiring employees establish, who has the lead role.
– What if one of you has a long-term illness? You need to determine what the business will and will not cover. It is not fair to one partner to have to assume the other’s role in addition to his/her own while the sick partner still draws full compensation.
– What happens if one of you gets hit by a bus? Does the remaining partner have right of first refusal, does it go to the deceased’s estate, does the partner’s surviving spouse/ partner come in to assist you?
– How much will each partner own? 50/50 partnerships first sound good but if you both disagree, how are you going to come to a conclusion?
– You wake up one day and just cannot stand the site of one another! Establish early how the company will be valued so that it does not become a source of contention when the heat is up.
Partnerships, while common in business, should only be set up with an understanding of not only how will you get into them but how will you get out of them. People who believe they will always be friends ignore statistics that show that a majority of partnerships established will be dissolved within the first five years, not to mention the lost relationships. Early planning for your partnership now can save severe heart- ache later. FBN
Russ Yelton is president/CEO of NACET in Flagstaff. Contact Yelton at 928-213-9234 or firstname.lastname@example.org. For more information on NACET, visit www.nacet.org.