How Small Businesses Get Partnerships To Work

 

Going into business with one or more partners requires a strategy in and of itself.  I believe each partner in the organization should have a job description and plan to contribute to the company's management.

 Partners get along great in the honeymoon phase of a new business. But beware: Your business partnership should be clearly defined upon startup before discontentment happens. It happened to me in one of my companies where my partner got a new job instead of working for our business. When I questioned why, the response was, "Their benefits are better."  Her action was an absolute shock to me, and fortunately, this partner accepted the terms of the buyout.  

 Approximately 8% of all small businesses in the United States include a partner.[1] When you start a new company with partners, remember to create your partnership agreement in conjunction with your business strategy. This agreement should contain instructions on the role of each partner within the organization.  It will save money and the opportunity to avoid potential anguish and unnecessary future lawsuits.  If you are already in a partnership, consider creating an agreement before problems occur.

 The following list of questions can help you create your partnership strategy.

  • What are the roles each partner will take in operating the business?
  • How will final decisions be made?
  • Who has the tie-breaking vote?
  • Do you have a written formal arrangement for the partnership?
  • Who will the employees go to with specific questions?
  • Will each partner make the same decision in daily business operations?
  • What skills will each partner bring to the organization?
  • What executive skills are missing from your group?  

 Many other questions need to be addressed and answered in an in-depth partnership strategy to succeed. I met an entrepreneur at a presentation I gave on business strategy. He confided to the group of attendees his three equal partners rarely worked in the office. He felt he did all of the work. It was a perfect example of what could happen to a startup with partners and no strategy.  

 If you are in business with one or more partners or considering a new company with a partnership model, please consider creating a detailed partnership strategy as part of your overall business plan.

 

Written by Darlene Ziebell

 

[1] https://taxfoundation.org/overview-pass-through-businesses-united-states/

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