It may be enjoyable and difficult to run a small business with a partner. It also has a number of benefits and drawbacks. It’s difficult to find a trustworthy business partner, which is why so many entrepreneurs launch their companies with friends or family. Partnering with someone you know could seem simpler on the surface, but that’s not always the case. Furthermore, if done incorrectly, it might destroy a marriage, a friendship, or a familial bond.
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The Benefits and Drawbacks of Collaboration
When two or more individuals start a firm, they contribute more expertise and experience than a one-person corporation, therefore it makes sense to start with a partner. Additionally, you’ll probably begin with more money, a larger network, and more possible clients.
Of course, there are also some drawbacks. To begin with, you’re sharing control and the money. You answer to yourself if you are the only owner of the business. However, you are answerable to someone else (or perhaps more) in a partnership.
Before we get started, a brief tip: Don’t name your company after you and your partner. It restricts your chances of growth.
To ensure the success of your business cooperation, adhere to these guidelines to avoid issues developing.
Select a Complementary Skills Partner
When looking for a business partner, avoid looking for someone who is “just like me.” Rather, having a spouse whose skills balance your deficiencies and vice versa is essential to a successful partnership.
For instance, who will handle the other facets of managing a firm if you and your potential partner are both skilled salespeople? It would be more beneficial for an introvert to be paired with an extrovert rather than another shy person. It’s important to work with someone who pays attention to details if you’re not excellent at them.
Do you recall the adage “the sum is the whole of its parts”? A better, more balanced whole is what you’re trying to achieve.
Appoint a Partner Who Shares Your Values
Nevertheless, it’s imperative that your spouse and you share comparable work ethics and ideals. Make sure you have the same vision, aspirations, and goals for your new company before you write a single word of a business plan.
Make sure you both have the same end goal in mind and are dedicated to working full-time. A business catastrophe is waiting to happen when one partner wants to create a legacy firm that they can leave to their children and another wants to sell to the highest bidder as soon as feasible.
Do your research before entering into a business relationship with someone you don’t know well. Speak with their old coworkers if you can. Even if it doesn’t appear like it has anything to do with company, look through all of their social media accounts. Look up information about them online. Consult with other professionals in your field.
Additionally, it’s a good idea to verify their credit. Inform them that you believe they ought to look into your credit as well.
Write It Down
Define each partner’s tasks and obligations precisely because forming a partnership is a legal commitment. Make a partnership contract. Think about the following:
Some business owners believe they don’t need to draft a formal legal partnership agreement when they start their company with friends or relatives. That might be harmful. Having legal documentation prepared is essential, regardless of who you are beginning a business with.
Salary and contributions: Is one contributing more than the other? It doesn’t always follow that they will make more money; you might need to take sweat equity or other considerations into consideration. Or will profits be distributed equally? Once more, this must be specified up front.
Decision-making and titles: Will there be a single CEO or two? Who has the last word? Who will manage the company on a daily basis? How will conflicts be settled? Will you seek mediation from a third party? Where do workers go for answers? Will the partners share responsibilities or will one partner be more visible to the public? Are all partners able to sign contracts and checks?
Growth: Is it possible to change the cooperation agreement? Are new partners welcome to join? What impact will that have on everything above?
Make a What-Ifs plan
You must anticipate potential problems and make plans for every scenario. What would happen, for example, if you and your spouse were involved in company and you were divorced? Who is granted custody of the business?
Even though it might seem early, the partnership agreement should cover the procedures for a possible split up front. What would happen to the company, for instance, if one of the partners passed away, retired, or chose to leave? Will the leaving partner have to sell their shares to an outsider, give them to their family, or offer them to the other partner first?
Hire a lawyer to assist you in creating a partnership agreement.
Chose the Appropriate Business Structure
A partnership may be set up as a limited liability partnership, general partnership, or limited partnership. Alternatively, you might decide to set it up as a S or C corporation. Every business structure has pros and cons with relation to continuity, taxation, and responsibility. To find out what kind of business is best for you and your partner, consult an attorney or other knowledgeable counsel.
To shield the partners from the company’s debts or other responsibilities, several experts advise forming your partnership.
It might be difficult to choose the appropriate business structure, therefore it’s essential to get advice from an accountant to make the right decision.
Talk
Communication is arguably the most crucial element in sustaining a fruitful collaboration. You must be at ease discussing any problems with your partner. Just remember to be considerate of their viewpoint.
The following advice can help you maintain the conversation:
Set up frequent in-person or video conference sessions. Talk about your personal well-being in addition to your business. It makes you feel more involved in one another’s lives.
Communicate often. Engage in daily communication with your spouse, even if it’s only a brief email or text message, in addition to meetings.
Pay close attention. Don’t become defensive if you disagree with someone. Rather, hear what your partner has to say so that you may both come to a choice that is beneficial for the business.
Don’t remain upset. Don’t remain angry for longer than a day if you are unable to address a problem. It just has the opposite effect. Discuss the matter and find a solution when you’re more composed.
Have a party. Celebrate all of your accomplishments, no matter how tiny.
Be Truthful
Soft-pedaling your genuine emotions out of concern for your business partner’s safety only leads to issues. In order for your relationship to succeed, you must not only be at ease with one another but also have complete faith in one another.
Ignoring problems simply breeds animosity and hatred, which may ruin your business and your partnership.
It might seem like you’re attempting to lessen the thrill and delight of launching by working out every element of your company relationship before you really launch. But by taking care of everything immediately, you can create a strong basis for a long-lasting, fruitful business collaboration.