Partnerships: 8 Things You Should Know Before You Say “I do”
Entering into a business partnership can be a great way to combine the talents and skills needed to build a successful company. But if the partners aren’t able to effectively work together or have different ideas about how to run the business, it can lead to damaged relationships or a failed business. If you’re thinking about entering into a business partnership, here are eight questions you should ask your potential partner before you commit.
Do you really want a partner?
Does your partner have skills or experience that you lack or that you’ll need only for a short time?
Will your business generate enough revenue to support a partner?
Would having a partner add more value or stress?
Do you work better independently or codependently?
Are you able to trust the other person with half the business?
Talk about your personal life, including your schedules, relationships, and family.
What does your prospective partner’s work/life blend look like? How does it match up to your own?
What about your definition of work ethic? What does your average work-day look like?
Who in your partner’s life needs to be onboard with this partnership?
Is there something in your partner’s life (family or work life) that would make the business a secondary concern?
What is your partner’s financial position?
Does your partner have the financial resources to contribute to the business?
What are your partner’s current financial commitments?
Would your partner be able to borrow money to contribute to the business?
Does your partner have any assets that could be used as collateral to obtain a loan?
What is your partner’s current credit score?
How many hours a day does your partner expect to put into the business, and do his expectations meet yours?
What are your respective roles and responsibilities for the business?
What do you imagine as your functional role in the business?
What risks to personal assets are each of you willing to take on?
What does Success look like to you?
Where do you see this business in 1 year? 5 years?
What does your ultimate “I made it” moment look like?
What version of “success” makes your stomach turn?
Strengths and Weaknesses
What do you need from your business partner?
How do you handle difficult or upset clients?
Have you ever had to dissolve a partnership or working agreement?
What is your favorite kind of work?
What tasks do you hate doing?
What are you best at?
What will each partner contribute to the business?
Will either partner draw a salary or be paid wages over and above profits?
What expenses get paid before the partners are paid?
How will you allocate profits and losses?
Definition of each partner’s authority and decision-making ability
How will the business be managed on a daily basis?
Procedures for admitting new partners
What happens if a partner withdraws or dies
How will you resolve disputes? 50/50 owners always end up in a tie.
Worst Case Scenarios
What happens if a partner is not meeting expectations?
If the business revenue is insufficient to pay bills, how are the bills paid?
What happens if one partner wants to take a temporary break from the business?
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