Are you planning on forming a partnership with a friend or colleague, but you’re not sure if a partnership is a good strategy for you? If so, you’re in the right place – this article details the important questions that you need to answer before starting a partnership.
Entering into a partnership can bring many benefits – shared knowledge and experience, shared financial burden, twice the work can get done, and two heads are better than one. But you need to make sure you team up with the right person because you don’t want to find yourself doing the lion’s share of the work for half the profit.
These questions will help guide you in discovering whether your partnership is based upon logic or pure emotion – the latter of which can have significant consequences down the track.
So, without further ado, let’s take a deep dive into discovering whether or not you should partner up or continue flying solo.
Questions to Answer Before Starting a Partnership
Are you doing this for the right reasons?
Before entering into business, you need to make sure that you’re doing it for the right reasons. The same applies for starting a partnership. The questions below will help provide further insight, but there are a number of things to consider before making a decision.
Does running a business make you feel overwhelmed, lonely or you’re not comfortable handling all of the decisions without having someone to bounce ideas off?
This is something that we hear all the time from clients and it’s not a good enough reason for taking on a partner. The best solution in this case is to get a coach. They will support and guide you throughout this process – dramatically increasing your chances of achieving success as an entrepreneur.
Some other poor reasons for entering into a partnership include lacking sufficient funding or certain skills. These reasons can ultimately lead to power struggles and piggybacking – two negatives that can cause a downfall in the most thought-out partnerships.
Why do you want a partner?
You need to be clear on why you want a partner. Thinking back to the question above, if someone wants to join forces with you because you have excellent technical skills and they don’t, and more importantly they’re unwilling to learn those skills, then down the track there may be problems.
It can be great for a business when two people come together with skills or knowledge that compensate for another’s lack. However, you need to agree on job roles and expectations around upskilling well before you become partners; and you better be confident that they are as good as you think they are. If they’re bringing skills or knowledge that you don’t have, or are not confident in, it can be hard to tell.
You don’t want to discover they are all talk after you’ve given up a percentage of your business.
Asking the question “why do you want to be partners” will also help you understand you and your potential partner’s level of commitment to the business. You can’t assume that they will be equally as committed to the business as you are – but your partner should be.
Both you and your partner should be equally committed to the success of the business.
So, you first need to be clear on your reasons for taking on a partner. You also need to feel confident in your choice, and the benefits they will bring to your business and to you. You then need to make sure you are both committed to the success of the partnership and the business. This takes us to the next question.In a partnership, you both should be equally committed to the success of the business. Click To Tweet
Are your values, goals and personalities aligned towards profit?
While it’s great to go into a partnership with someone who you get on well with, such as a friend or co-worker, it’s important to understand that this relationship will need to switch to one of a business nature.
You are going into business, therefore it should be treated as a business. This ultimately has the goal of achieving profit.
So, you need to make sure that you and your partner have aligning values, goals, and personalities. This will help to ensure that you won’t be disappointed down the track.
While we’re on the topic of personalities, it would be wise to make sure that you and your partner don’t have clashing personality types. There’s a number of online tests that help to determine your personality type. I recommend using 16 Personalities. Their online test is free, provides a clear result, and identifies your strengths and weaknesses – something you might want to compare between you and your partner.
Are you prepared for the possibility of losing a friendship?
Another question you need to answer before starting a partnership with a friend is if you are prepared for the possibility of losing that friendship if the partnership does not go well. And there is no guarantee that it will.
Make sure you think long and hard about this. If you can’t afford to lose such a special friendship then perhaps don’t start business with them.
Do you share the same vision?
All businesses should have a vision. They need to understand where they want to be in 1 year, 5 years, and even 10 years. You and your partner will need to discuss your business’s future. And make sure that you share the same vision and plans for growth and expansion! You should also discuss your exit strategy, when you’d both like to sell, close or transition out of the business.
What are your roles, responsibilities and deliverables?
Before going into business, you’re going to have to document you and your partner’s roles, responsibilities and deliverables.
This is particularly important if you’re going into business with a friend as it is unlikely that you would have interacted with them in a professional nature, only a social one.
A key role that you will have to determine is the leader. This is essential if your business has other employees or you plan to take on employees. You’re going to have to decide who is best equipped to take this role and then detail their responsibilities specifically.Before going into business, you’re going to have to document you and your partner’s roles, responsibilities and deliverables. Click To Tweet
You’ll also have to determine the roles, responsibilities and deliverables of the other partner. Are they the head content creator required to plan, organise, and post content for your online training academy? Or are they responsible for bringing on new clients into your consulting business?
Before entering into your partnership, make sure you clearly outline each partner’s roles and responsibilities on a day-to-day basis.
Ensure that you both have open channels of communication during this process and as your business grows, because the roles and responsibilities are more than likely to change with time.
Have you sorted out your prenups?
Your partnership is unlikely to last forever and you will eventually go your separate ways.
So it’s important to be prepared and plan for this scenario by putting together a transition or exit agreement should one partner want or need to leave the business before the other. This agreement will need to answer the following questions:
- What compensation will take place?
- How will your business resources be divided?
- How will your clients be looked after?
I know, a ‘business divorce’ is not something you want to think about before you’re even ‘business married’. But when it comes to your own liability and the care of your clients, it becomes a very important point to be clear on. It’ll also negate some of the stress when one partner wishes to exit the business because you already have a clear agreement in place.
Sorting out your prenups is particularly significant and links into the next question.
Do you have a partnership agreement?
Your prenups will tie in with your partnership agreement. There are 6 common elements that you should include in your partnership agreement document – in writing and signed by all partners. They are;
- Percentage of ownership. How much is each partner contributing?
- Allocation of profits and losses. How will the profits and losses be allocated in proportion to each partner’s ownership interests?
- Who can bind the partnership? What consent does a partner need to obtain before acting on behalf of your company?
- Making decisions. What is your process for decision-making?
- The death of a partner. This ties in with your prenups – what will happen if a partner passes away or leaves the partnership?
- Resolving disputes. How will you resolve disagreements between you and your partner?
Do you actually like your partner?
There’s a good chance that you’ll be spending the majority of your working week with your partner. So you need to make sure you actually like each other and enjoy spending time together. If you don’t, then this partnership is probably not for you as it will ultimately lead to conflict and (more than likely) termination.
So, hopefully you now have a clearer idea as to whether or not a starting partnership is a good strategy for you. But ultimately, it will come down to ensuring that you maintain a flow of communication at all times and that you’re honest with each other.
If you decide a partnership is not for you, yet you still feel you need support and guidance in your business, then perhaps you should consider a Fempire Coach. To take advantage of a Free Discovery Session with one of our experienced coaches simply click here.
Are there some other questions that should be asked before starting a partnership? Or do you have some experience in a partnership? Let us know in the comments!
This article was written for Fempire but was originally published to Business Women’s Media.
Anna Gratte is a marketing intern at Fempire. She has a keen interest in social media and content creation and is passionate about creating engaging content that inspires women to achieve success and live a fulfilled life.