So you want to work with a partner?

Partnership
arrangements are one of the most common forms of business and some
of them work just fine. Many don’t. In the beginning, everyone
involved is excited about the venture, so issues seldom come up and
no one wants to talk about the worst case scenarios. They are like
newlyweds that are blinded by hopes and dreams of how great
everything is going to be. Just like marriage, business
partnerships come with much emotional and legal considerations that
need to be addressed in the beginning, and it’s more than simply
who owns what. No one wants to talk about worst case scenarios in
the beginning (like bringing up the subject of a prenuptial to your
fiance), and it’s hard to anticipate all of the problems that can
occur in a partnership from the beginning. But there are common
problems that exist across business partnerships that you can
account for, such as an imbalance in the amount of work that each
partner is contributing, disagreements about the overall vision and
direction, and what happens if a partner simply loses enthusiasm
and want to go do something else. Partnerships can be hazardous to
a business’s health. In a 50-50 partnership, the partners are
obligated to buy the other one out if things aren’t working, and if
you haven’t worked this out in advance, it can create some serious
challenges and could cost you a boat load in legal fees. The key is
to protect yourself before you get into the situation you’re
currently in.

1. If you can do your business
   without a partner (even if it takes longer), I highly recommend you
   do. There are always people that you can hire to perform specific
   functions as you need them to supplement your
   shortcomings.
2. Do research on the person before
   you enter into a partnership agreement, and know the type of person
   you are dealing with. It’s specifically important to interview
   people that have worked for this person in the past so you gain an
   understanding of what they are like in business.
3. If at all possible, take the majority interest and don’t
   go in 50/50.
4. Make sure you put in a buy/sell
   arrangement into the initial partnership agreement or corporate
   structure.
5. If you suspect that your
   partnership is about to go south, deal with it swiftly and with
   good communication. (Refer to the book Crucial Conversations: Tools
   for talking when the stakes are high by Kerry Patterson and Joseph
   Grenny.)
6. Get a good lawyer.
7. Think about the future, and don’t dwell on the past.
   Letting it go is difficult, but shoulda coulda wouldas are harmful
   to your future. You can’t change it, so move on.

Ed Stillman is a
Vistage Chair in Austin, Tex., working with business owners and
CEOs who are growing their profitability greater than their
competition. He can be reached at
ed.stillman@vistage.com