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Things to consider before bringing in a business partner
Many business owners find that running a business is not a one-person job. There are countless responsibilities and expectations on an owner’s shoulders, from hiring and managing staff to developing products and business opportunities. A partner may bring valuable synergy if your talents vary a bit, and help expand the business. Having a partner may provide a welcome release valve, and allow each of you vacation time, and time away from the day-to-day needs of a business interfere with family or health obligations.
If you are thinking about partnering with someone in running a business take some time to consider:
1. Have you partnered professionally before? Even if you and your potential partner are family or life-long friends, the experience of running a business together can be unlike anything you’ve experienced before. If you are new to this arrangement, proceed with caution and only after extensive planning. There may be more than a business relationship on the line: there can also be a friendship or family connection at stake.
2. How do you each resolve conflict? Do you react similarly or differently to pressure or stress? Is one of you a steamroller while the other shies away from any form of confrontation? Understanding how you each respond to conflict can be crucial, as there will be times when a disagreement can adversely affect the business.
3. Do your personalities clash or complement? Having the same personality as someone else may work well in social situations; clashing personalities may be no problem in small doses. However, running a business together typically can be easier when people have complementing styles. Being too similar or too different can affect partners’ ability to work together to tackle various complex goals.
4. How thoroughly have you discussed your roles, and the life cycle of the business? Make sure you know which roles you each will fill. Is one person in charge of day-to-day operations while the other has a more hands-off role, or will you be doing similar jobs on alternating days, or together most days? Who will be funding capital needs? How will cash flow be distributed? What is your exit strategy? How much input will each person have in critical areas of business transactions? Knowing the specifics of what you each will do can avoid confusion and prevent conflicts from arising.
Last but not least, consider seeking advice about your expectations and responsibilities, particularly with an experienced attorney who can help you craft a partnership agreement to further solidify the arrangement.
