So you and your very best friend have decided the coolest thing in the world would be to start a business because you love being together and think so much alike.
Before you get all caught up in the excitement, plant your feet squarely on the ground and think through what it might look like and whether it’s really the right choice for both of you. Moving slowly is not a bad thing when it comes to a big decision like starting a business.
Trust me on this. I speak from experience.
When I started my business in 1996, I had a business partner. It wasn’t the best business decision I ever made. If you’re considering taking on a partner in your business or doing a joint venture project launch, use my story to help you make a wise decision.
Here we go…
I hugged my partner as we left the lawyer’s office ecstatic that we had just completed filing for our own S corporation. We’d officially opened our business consulting firm. Our dream of helping small businesses succeed was becoming a reality. We both beamed, so proud of our accomplishment. “I hope we’re always as happy as we are today,” I said.
That day was but a distant memory a short three years later as we sat across the table from each other with our mediator guiding the discussion about her buyout. It wasn’t all a loss. We were successful during our short time together and learned many rich lessons. I want to help you learn from those, so here are:
7 Things to Consider Before Taking on a Business Partner
Determine who does what. You don’t have to do everything together. It eats money and resources when you’re a small business. Remember that old phrase "divide and conquer." It will serve you well in your business. We aligned our responsibilities with our strengths and avoided duplication of effort.
Use expert advisers. Starting and sustaining a business is way too complicated to navigate the legal and financial waters alone. Hire an accountant and an attorney. Their expertise is invaluable. Using these resources from the beginning helped us put in place agreements that smoothed the way in our separation.
Communicate often. Talk about what you’re doing right as well as what you think needs improvement. We discussed our strategy and direction weekly. In our second year, we had a colleague join us as our advisor; someone we both trusted to help us see things we couldn’t because we were too close to the business.
Talk about personal values and vision. Be truthful to yourself and your partner. We should have talked at length about our personal vision for the business and what we valued most in our personal lives. We didn’t have this discussion until we were well into our second year of business. We discovered a lot of differences that became obstacles.
Decide who will decide. Discuss your decision-making process or plan on stumbling over important decisions. You can’t have more than one leader in any given situation. Determine who has the authority over what type of decisions. Decide who will be the final decision-maker before deciding on issues.
Make sure you’re on the same page. Can you survive if the business stumbles? Are you willing to walk away from business that will drag you down? Can you see the possibilities of business expansion? Be honest with yourself and your partner. Realize things change. Heed warning signs early. As I look back, I realize I dismissed the signals my partner sent me.
Discuss what work means. It takes many different skills to be successful. Make sure each of you understands that running the business is as critical as providing your product or service. One of the most astounding statements I heard from my partner was, “I did all the work!” To her, work was delivery of our products and services. To me, work was business development, management and operations.
My partner and I reached agreement on her buyout, and the friendship was lost forever. Did I bring in another partner? No. It’s not for me. I’ve propelled my business forward better and faster on my own. Good luck on your decision!