Tips for Business Partnerships

Shalom Lamm, the New York State real estate advisor encourages business partnerships when they make sense. However, Lamm says to look carefully before you leap.

 

He is often reminded of the sage advice that a business partnership can be seen as akin to a marriage. Everything starts out all hunky-dory and full of sweet promises, but in the end, the partners may be at each other’s throats.

 

One of the first requirements for a successful partnership is to ensure you and your partner have the same vision.

 

For example, if your partner dreams of developing a Korean chicken franchise that will go nationwide and you happen to love Korean chicken, that’s not enough.

 

It might turn out that your partner is willing to work 80 hours a week to make it happen. However, if you recently retired from business to spend more time with your family, how are the two of you going to work together?

 

Going back to the marriage concept, if the breadwinner would rather eat bologna sandwiches with white break 7 days a week to save a few bucks while the wife just loves to eat at 4-star and 5-star upscale restaurants, it’s not hard to figure out the two will be on an eventual collision course.

 

At the same time, if your values are aligned but you don’t have complementary skills, the partnership may be doomed to failure.

 

Let’s say partners with great graphic skills decide to start a print shop. That’s great so to speak, but one partner that is fantastic at graphic skills and another that is really great at marketing or running the back end of the business would be a stronger team.

 

Shalom Lamm thinks that another thing to keep in mind is one another’s track record. By this, we don’t necessarily mean that the two will have a track record of working together on a project. But if you can identify how your partner has handled past business challenges successfully, you are much more likely to work together harmoniously.

 

The next step is to clearly delineate exactly what each partner’s role is. At the beginning of a startup, it might work that each partner will do whatever is necessary to make the business going. But that only works so far. Eventually, the exact roles need to be spelled out, and the sooner you do it the better.

 

Next, is agreeing on the right business structure. Particularly when it comes to taxes and protecting your liabilities, the right business structure is essential.

 

If you’ve gotten this far and there are no major agreements, then put the whole thing down into writing. Remember, particularly with your business structure, there are definite steps you need to take legally. Above all, be 100 percent honest with each other. Do not soft-pedal your differences for fear of offending one another.

 

In fact, this is so important that before you formally agree to form a partnership that you should point-blank ask, “What are your fears and reservations about forming this partnership?” This will open the door to total honesty in our partnership.

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