The initial stages of a business are critical to its performance and can be overwhelming for entrepreneurs. It is common to find a business partner to help you bring the idea to life. A partnership brings many benefits to the table, including shared risks, diversity of ideas, and skills. Unfortunately, partnerships can have rocky patches, and the way you handle the disputes will have a significant impact on your business. The following tips will come in handy in ensuring the partnership survives the hurdles:
1. Have a Shared Vision
Start-up ventures require passion and commitment to realise their business goals. That means your partner needs to share a similar vision to make the business work. It would be terrible if a partner loses interest or gets bored with the venture along the way. To ensure the passion remains the same, take time to determine the immediate goals and the vision and mission before the commencement of the business partnership.
You can create objectives for the company and narrow them down to personal goals that will support the concept of the business. If you align your ideas and visions for the company, there is a chance you can make the partnership work.
2. Pick a Partner With Something to Offer
When starting a partnership, ensure you pick partners with something to offer. Do not choose a business partner based on your relationship or familial ties with them. What skills or expertise is your partner bringing to the table? Is it their experience in the field, business connections, or capital? If you complement each other, you are likely to make the business a success.
For example, if you manufacture products for sale, you need a partner with marketing skills to ensure the sales and distribution is smooth. From the strength of each partner, you can define roles and responsibilities to avoid stepping on each other’s toes.
3. Have Some History
You cannot walk down the road and pick anyone to be your business partner. Even if they have the business connections and financial power to get the venture rolling, you need to know them well. What is their work ethic? How do they handle stressful situations?
In order to know if the person is fit to be your partner, you need to know the type of person they are. Go for someone who you have a shared history of working together and dealing with challenging situations.
4. Determine the Partners’ Roles and Responsibilities
Most conflicts arise when a partner feels like they are doing most of the work. During the early stages of the business, everyone will assume their roles in the informal structure. However, after some time, a lack of clear structure can lead to business disputes.
To avoid conflicts in your partnership, ensure every partner has clearly defined roles. What departments will they head? What are their specific duties in the business? Having a formal structure and set boundaries will benefit the partnership and the employees.
5. Discuss Financial Matters
When starting a business, you are on an unchartered territory since you are uncertain of its success. Most partners ignore financial matters and focus only on making the venture a success. However, if you do not have the financial talks, in the beginning, they may lead to business disputes. For instance, your partner may ask for more assets, yet you agreed on a percentage.
To avoid conflict, ensure you include the profit-sharing ratios and asset distribution in the contract and make it legally binding. You should also consider hiring a commercial litigation lawyer to help you prepare the contract for all the partners to sign.
6. Discuss the Commitment Channels
When launching a start-up, it is common to have other commitments like a day job or family responsibilities. Therefore, you may not be able to devote all your time to the venture. If your partner cannot be available on some days, they should show their dedication by keeping the communication channels open. If your partner absconds their duties and always has excuses for not accomplishing the set goals, that is a red flag.
It would be best if you laid a strong foundation for success before you start a partnership. The above tips can help you to form lasting business partnerships and a successful venture.
Patrick Watt is a content writer, writing in several areas, primarily in business growth, value creation, M&A, and finance. Other interests also include content marketing and self-development. Say hi to Patrick on Twitter @patrickwattpat