In business, there’s strength in numbers. One way to start a business is to work with someone else. You can partner with your family, friends, colleagues and other individuals that have the skills and knowledge that you need for your business.
Having a partner (or partners) allow you to focus on tasks that you do best, while making sure that other important aspects of the business are effectively handled by someone else. You have someone else to bounce off ideas, review strategies and plans, and make sure that the business is in the right direction.
However, working with a business partner also has its own drawbacks. Your personality and views may clash. The partner may not be as effective or efficient as you’d expected them to be. Thus, your personal relationships can be affected, even destroyed: best friends can turn to bitter enemies; couples can split up; and husbands and wives can divorce. You and your partner could also end up in court battling over the business.
There are pros and cons to working with a business partner. Hence, it is important to make sure that the partnership is working and not giving you any problems. Here are some suggestions on how to work harmoniously with your business partner:
1. Find partners that share your vision and objectives for the business. You can work more effectively and harmoniously with a partner who shares what you want to accomplish in the business.
2. Consult an attorney to help you sort out the legalities of your particular type of partnership. No matter how cordial and close the relationship is right now, it is to your (and your partner/s) utmost interest to have a properly drafted partnership agreement in place. The agreement will address the structure of the business ownership, capital contribution of the partners, percentages of the partnership rights and interest, distribution of profits, management of the business, salaries of the partners, transfer of partnership interest, among others.
3. Include a buy-sell agreement in your partnership agreement that will clarify what happens when one partner leaves the partnership. This is a binding contract between the partners in the event someone exits the business (whether death, retirement, or simply to pursue other endeavors) or the business becomes bankrupt. This agreement will define what events will trigger a buyout, the price that is to be paid for the withdrawing partner’s interest in the business, and who can buy the withdrawing partner’s interest (e.g. outsiders vs. other partners in the business. Read the article “Business Partnerships: When a Partner Leaves or Dies”
4. Complement, not compete, with each other. The focus should be what’s good for the business, not for the individual partners.
5. Let your partner know that you value his contributions to the business. Respect the role that your partner has in the business and the work that they do. Acknowledge and praise his efforts — not just the results — and the things that he does to move the business forward.
6. Communicate well with each other. Be open and honest. Clarify everything to prevent misunderstandings and communication breakdown. Avoid expressing criticism of your partner’s mistakes. Recognize that you and your partner will both, at times, need “space”
7. Avoid money conflicts, one of the leading causes of business partnership breakdowns. At the onset, clarify your concerns and issues pertaining to money. This is especially true if one partner contributes most or all of the capital, while the other partner contributes time and no capital. Hammer out any profit sharing agreements and anything that has financial implications to the business and the partners.
8. Prevent escalating misunderstandings to conflict. Resolve disagreements quickly, without letting the issues drag on and rise to deeper misunderstandings. Talk out any festering resentments you or your partner have.
9. Take time to celebrate your business successes together.