I made an avoidable mistake. I did what so many small business owners do – I entered a business partnership without proper consideration
Consequently, the partnership lasted less than a year. I dare say my ex-partner would agree that he didn’t give the matter proper consideration either. If we had conducted the research and soul searching that I now know is essential, we would have realised that we had different goals for the business, vastly different management styles, and personalities that are incompatible for a partnership.
You’ve bandied about your business model exhaustively, and all that remains is to decide whether you’re going to go it alone or enter into a partnership. It makes no difference if yours is a new business about to be launched or an existing business at a crossroad – the decision requires the same degree of contemplation. Should you retain full ownership and hire the expertise and raise the capital you may not have, or should you trade away partial ownership and control to a partner or partners in exchange for expertise and capital?
Interrogate yourself mercilessly. How does the proposed partner’s personality, work habits and work ethic fit with yours? Can you accept that you’ll have to compromise sometimes? Do you or your potential partner have any personality traits that are difficult to work with? A clear understanding of each partner’s contribution in terms of expertise, effort and capital has to be reached. A management and administrative structure should be agreed upon. All of the details should be carefully documented in a partnership or shareholders’ agreement, which must include a termination mechanism.
Many business partnerships don’t survive for the same reason that so many marriages don’t survive: irreconcilable differences. Because the statistical odds are stacked against partnerships, if you enter into one tread carefully and thoughtfully and with a big stick in the form of a comprehensive partnership or shareholders’ agreement that contains an escape clause.
Michael Best is a print industry veteran, accountant and author of Characters Who Can Make Or Break Your Small Business. Through 39 characters, Michael covers all aspects most small business owners can expect to encounter in the life of a business from inception to disposition.
It is available from Amazon and www.smallbusinesscharacters.com