1. 7 Things to Ask Before Going into Business with a
Partner
Creatinga partnershipasa wayto go intobusinesscanbe a greatideathat presentsyourbusinesswith
all the advantagesof havingtwodedicatedentrepreneursinsteadof one.Thatmeanstwice the
resources,twice the skills,andtwice the amountof time todedicate toseeingthe businessthroughto
success.
However,there are alsosome issuesthatcouldcome upand derail apartnershipbefore iteverhasa
chance to become successful.Forexample,if youcannotworkwell together,if youlackanessential skill
or resource as a team,or if you simplyenvisiontwodifferentpathstosuccess,yourbusinesswilllikely
ultimatelyfail. Thiscanbe costlyif not devastatingasa businessowner.Before yougetintoasituation
where youputyour businessandpartnershipatrisk,it’swise toaska few questionsupfront – before
any contracts are signedor agreementsare made.
Is your vision for the company the same?
Sitdownand talkwithyour potential partnersoyoucan ascertainwhatvisioneachof youhas for the
companyand if those visionsare compatible.Remember,avisiondrivesall the decisionsyoumake as
yourun your business.If twopartnershave competingvisionsandmakingdecisionsaccordingly,the
resultscanand likelywill be disaster.
The bestway to be preparedisto draft a sharedvisiontogetherandputit inwriting.If thissimple task
cannot be accomplishedbythe twoof you,thenthere isno waythe partnershipcanhope to succeed.
What sort of strengths and weaknesses do you have as a team?
It’sa clearadvantage of partnershipswhenyoucansupplementone another’sskillset.If yourpartneris
a saleswizand youunderstandhowtomaximize productionoutputandminimize cost,the partnership
shouldbe a fit.But you’ll neverknowthisuntil yousitdownanddiscussbothyourstrengthsand
weaknessesasa teaminorder to assessyourpotential.If itcomesdowntoit,you maybe missingan
essential skill setthatadifferentpartnerwouldprovide.Findingthisoutupfrontbefore there isany
moneyonthe line isthe bestway to handle thispossible issue.
How will conflicts be handled?
In a partnership,there isnoauthorityfigure –bothpartiesshare suchauthorityequally.Thismeans
there isno clearcut way to respondwhenthere isadisagreement.Sittingdownanddiscussinghowto
handle disagreementsbeforethere everisone isa greatway to geta glimpse intohow conflict
resolutionwill workwhenthingsgolive.
Betteryet,whenyoucome up witha plan – putit inwritingsothat there isno misunderstandingor
assumption. Whenyousitdowntohave that conversation,make sure yougettoknow a bitaboutyour
partner’scharacter andhow theyhandle resolution. Explainhow you’ve handledtoughspotsinthe past
and ask yourpotential partnerquestionsabouthow they’ve handledconflict.Be thoroughtoprotect
your investment.The time tofindoutthere isa problemisupfront,beforeanythinghasbeensigned.
How much time will each partner be investing into the company?

2. It’sjust the truththat differentpeoplewillhave differentamountsof time toinvestintheirbusiness.
This,however,doesnothave tobe a problem.If youcan sit downanddiscussopenlywithyour
potential businesspartnerhowmuchtime eachof youhas to commit,realisticexpectationscanbe set
beforehand.While thismaynotseemimportant,itisessential toeliminateanyfrictionthatcanarise
whena businessgoesliveandone partnerspendsalotmore time workingthanthe other.
A goodway to handle thisisto,as always,puttime investmentexpectationsintowriting.If theyare
greatlydisproportionate,perhapsadiscussionof ownershipequityshouldbe broughtupjustasit would
if one partnerwas bringingalot more capital to invest.
What size of financial investment will each partner be making?
One commonreasonfor partneringinbusinessisthatone partnerhasmore capital to investwhile the
otherpartnerhas expertise ortime theyintendtoinvest.Bothof these have businessequityandshould
be representedinownershipshare.Thismustbe discussedupfront,however.Intraditional
partnerships,equityisdeterminedbycapital investment,somakinganydifferentarrangementsmustbe
done up frontand of course put intowritingtopreventmisunderstandingsorotherdisagreementson
downthe line.
Are you both willing to put it in writing?
As hasbeenmade clear– one of the bestthingsthatcan resultof askingthese questionsistoclarify
possible areasof disagreementorconflictandputthemintowriting.Thisis,infact, whatshouldbe
done forthe entire partnership.The agreementasa whole shouldbe putintowriting.Nosectionshould
be leftoutand all importantinformationshouldbe explicitlydetailedinordertopreventfuture
disagreements.
Be sure to include the followinginyouragreement:
 The full legal name of the partnershipaswell asall partnersinvolvedinthe agreement.
 The contributionsinterms of capital,time,orexpertiseeachpartnerintendstomake.
 A layoutof managementexpectationsandguidelines
 Planson howto resolve disputes
 Plansforhow to introduce anew partnerinthe future
 Planson whatto do inthe eventof the deathof one of the partners
 A clearlydefinedlistof eachpartner’sresponsibilities,authority,anddecision-makingpower
 A clearlayoutof how profits,losses,anddrawsare to be allocatedbetweenpartners
 Your exitstrategy
What is your exit strategy?
The bestlaid businessplansmaynotbe enoughto overcome the unforeseen.Therefore,alwaysleave
yourself anexitstrategy.A simple discussionabouthow toproceedif one partnerwantsto leave the
partnershipshouldhappenupfront.Decide if one shouldbuythe otherout,orif theyshouldsell toa
thirdparty. Talkingaboutwhateach partnerwouldpreferinthissituationandhow youwill proceed
before signinganagreementisanessential stepinprotectingyourpartnership.
As always,make sure toput yourstrategyintowritingandinclude itinyourpartnershipagreement.

3. To sum it up…
These questionsall getafewbasicthingsyouas a potential businessownerandpartnershouldrealize
to give yourbusinessitsbestchance atsucceeding:
 Talk abouthowthingscouldgo wrongbefore theydoand decide uponaplanof actionto
implementwhentheydo.
 Put everythinginwritinginthe partnershipagreement.
 Leave yourself anexitstrategytomake sure thatif the businessgoessouth,itwon’ttake your
careerwithit.
Still have questions?
Call us at 305-548-5020 for free a consultation