How to Build A Successful Business Partnership

How to create a successful business partnership

So, you want to create a business partnership – fantastic! However, as you are likely aware, things are not as simple as they seem when money and business are involved. To put yourself on the path to success, ensure the right startup structures are set up to avoid the need to hire a partnership dispute lawyer.

What makes a business partnership successful? That is an excellent question. The following are seven factors to think about when creating a business partnership.

1. Choose the best partner for you

 Not unlike a marriage, you should be careful to create a partnership with the right person. Naturally, your partner should be someone that you trust. This individual should have some quality that the business requires but you yourself lack. This factor may be connections, money, expertise, or a specific skill that encourages the business to expand beyond what you can achieve on your own. Let’s say you are starting a game design company. You have skills in coding, but your best friend Gary is a marketing whiz. Gary’s skills would complement yours to build a strong partnership relationship.

2. Create a shared vision and mission

The mission and vision statements of any company represent the business’ heart. It is therefore important that both partners come to an agreement on the direction the company should take as well as what the business’ purpose is. Having a clear mission and vision with your partner will set you on the path to success. You and Gary may share the same dream of creating a popular video game that you can sell to a big player in the industry.

3. Set terms from the start

It is essential that you set the terms of your partnership from the beginning of the relationship and business. Beyond agreeing on basics like who is responsible for what tasks and how much each person will invest in the company, you should make sure you agree on grey areas like work ethic and acceptable conduct. Also consider the future – if there is something you will not accept five years down the line, do not accept it now. Let’s imagine that Gary is not a very conscientious worker; he likes to go on vacation… a lot. Perhaps he is not the right partner for you if he cannot focus on your shared goals.

4. Review communication

Honest, extensive, and free communication is a critical part of any successful relationship. You should not hesitate freely expressing your desires, opinion, expectations, frustrations, and fears in your partnership. If partners’ communication styles do not match, the partnership may not work out. Maybe you are a very open and honest communicator, but Gary is a hothead who quickly becomes hostile at the first sign of confrontation. This would create an issue when problems inevitably arise and need to be solved.

5. Plan together regularly

There is a reason a partnership is called a partnership. It is about working together. This means that you should plan as a team and make decisions together. When both groups contribute their strengths, ideas, resources, and strategies, the outcome is a productive and enjoyable relationship. A genuinely strong partnership will create more ideas than any one partner can think up on their own. So, do not hesitate to bounce ideas off one another. Who knows what you two might come up with?

6. Clearly define job roles

Responsibilities and job roles in a partnership can quickly become blurred because both partners are technically in charge. Thus, at the beginning, it is important to put in writing the responsibilities and duties of each partner. Look over these roles every now and then, at least every six months or so, to see if there have been any changes in the company like hiring a new employee or securing a major contract. Keeping track of who is in charge of what will help the business run smoothly. If you and Gary form a partnership, you should clearly define your role as the head of all technical aspects, while he will be in charge of marketing and sales.

7. Put a legal agreement in place

A formal partnership agreement is critical, even if you are starting a business with your spouse or your friend. An agreement lends protection to both parties and can prevent arguments before they come about.

The following are a few important topics that should be in the legal agreement:

• Business name
• Partnership type
• Partners’ information
• Ownership division between/among the parties if more than two
• What is the contribution of any limited partners?
• Dispute resolution
• Sharing of losses and profits
• Who manages the company? Is management a shared responsibility?
• What happens if a partner wants to leave?
• Can relatives participate?
• What happens if a partner dies?

The answers to the above topics should be put in the foundational business document.