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Most of us want to share important things in our lives with someone. If we’re passionate about business, this desire certainly can extend to our entrepreneurial ventures. As brothers who have been business partners for a long time, we can attest to that!
And in the case of startups, two heads really may succeed better than one. There can be many practical considerations for starting with – or taking on – a business partner, including the complementary skills, additional capital and entirely separate network that someone else may bring into the business.
When you want to form a winning partnership, consider these 9 tips:
1. Don’t Just Look in the Mirror
Figure out your own strongest capabilities and then, ideally, consider only partners who would complement them. More important, you have to be sure you and your potential partner share basic business and ethical values. Look into background and character if necessary.
“Otherwise you can have enormous problems,” says Marsha Firestone, president of the Women Presidents Organization of entrepreneurs. “You need to know whether you can trust them and you’re on the same wavelength.”
And while we don’t suggest that you simply go with your gut, it is important that you like the person you’re partnering with. That basic human connection can help you weather the inevitable tribulations of a startup.
2. Don’t Look Through Those Closest to You
Ever heard that you should never go into business with family or friends? While there’s some truth in that, many thousands of successful companies began with just such a partnership. If you click with someone enough to hang out or live with them, it could be a good predictor of entrepreneurial synergy, too.
But if you’re going to partner with someone that close to you, build in safeguards to protect both your business and personal relationships. Kathy Dimmick and her husband founded United Imaging Partners, which runs pregnancy-ultrasound centers based in Dallas, and to accomplish this, they always have someone else in the company attend the couple’s business discussions.
“That way,” Dimmick says, “we each feel compelled to give only our business opinions without it becoming personal, or about something else in the overall relationship.”
3. Decide Who Does What and How Much of It
Establish clear roles, responsibilities and expectations for each partner from the git. If you’re going to share part of the same responsibilities, spell it out.
In forming a partnership to establish First Security Lending in 1997, in Burbank, Calif., Ronnie da Motta and Justin Aldi roughly divided duties along the lines of their aptitudes: da Motta in investor relations and negotiations, and Aldi in sales and training. “And as we get more duties put on our plate,” da Motta says, “we just divide them up in the same way.”
4. Go for “Common Wins”
Set it up so you and your partner’s interests in the success of the business are totally aligned – when one wins, both win, regardless of who’s actually doing the achieving.
Maybe you’ve made a good hire recently as the “inside” person, while your partner just landed a big new client. Treat both successes as being for the greater good of the business. If your partnership is good, the credit and rewards for individual success will even out as the company succeeds.
5. Don’t Hesitate, Communicate
It’s crucial that you routinely talk, e-mail, read each other’s body language or whatever when you’re in business together. When you don’t – and that’s happened to us on occasion – is when your business makes the biggest mistakes.
It’s best to set up regular occasions where you do nothing but communicate with each other about the company. Lori Whitesell and Vida Johnson are partners in a franchise of Synergy HomeCare, in Tucson, Ariz. “We have a set meeting each morning where we decide who’s going to do what each day, and that usually irons everything out for us,” Whitesell says.
6. Dip In Your Toe and Test the Waters
If you don’t know your potential partner thoroughly, set up some way to test how you might do business together. Perhaps he or she could work for you on contract at first or as an employee for awhile. Such a crucible will be the best test of whether you’d make good partners.
Chris Winfield, for instance, took on Jake Matthews as a consultant for several weeks before Matthews became a minority partner with Winfield and his fiancé, Danielle Lanzillo, in 10e20 LLC, an Internet-marketing company in New York City. Even though Matthews was a childhood friend, Winfield says, “He needed to be able to prove himself first and see the opportunity that he had.”
7. Marriages Change, Be Flexible
Just as personal relationships change over time, so do business partnerships. The way you first set things up may not be relevant, or best suited, to later realities. So you have to agree up front on the need to be flexible – and then regularly look at the partnership to decide exactly how.
8. Consider an Exit Strategy, and Keep the Back Door Hinges Oiled
It may be the farthest thing from your mind, but at the start of your partnership you should consider the possibility that someday, for some reason, it could end. As best you can, try to plan how to handle it.
Debbie Mrazek and Donna Hegdahl ended their six-year-old partnership in a sales and marketing consulting company several years ago because Hegdahl wanted to build a bigger company; Mrazek didn’t. The divorce was amicable. “But I know now that we should have talked about that kind of development right at the beginning,” says Mrazek, now CEO of The Sales Company, a Dallas marketing firm.
9. Handshakes Really are Worth the Paper They’re Written On
Handshake agreements have no place in business partnerships, even if there’s goodwill all around at the start. Put every possible important understanding in writing – how the work is to be divvied up, how profits are shared, where funding is coming from, how and why the partnership could be terminated.
“In case it falls apart,” Firestone says, “you have left nothing to question, and you’re both protected.”
Business Partner Bottom Line
Startup partnerships can make your entrepreneurial journey more interesting and exciting. If you take these tips, you’ll go a long way in ensuring that both your business, and your partnership, will come out on top.