Business partnership can be a great way starting a business, but you have to watch out who you sign that partnership deal with.
I am not a big believer of having two people run a company. I firmly believe in having one person run the company with their vision, creativity, innovation and capital. Then, I agree with having someone else working under then to help with executing on that vision.
But if you want to have a partner or you’re already in a partnership deal. This article can be your right knowledge leverage.
As an entrepreneur, your reputation is everything. When you have a bad business partner, your reputation will suffer. Depending on what the issues are. As tony Robbins says…..
The quality of a persons life is most often a direct reflections of their peer group.
And that sounds the same in business, the quality of your decision and your success fallback on who is on your team.
A bad partnership could lead to loss of clients, a toxic work environment and inability to find ways to increase profits. If your partner is unethical or engaging in fraudulent behavior, it could even mean fines or legal action against your company.
Our latest: Should i start a business with a friend?
Issues to consider before you ink any business partnership deal.
Just because you are friends or you’ve done business with a person in the past does not mean they’ll make a good partner in business. Going into business partnership is not something to be taking lightly. Many even venture into partnership without a prior exist agreement laid out at the beginning of the partnership. If you don’t have a exit agreement getting rid of a bad business partner is more difficult.
But if you’re considering going into business with someone, consider working with a business coach to help you determine whether it’s good fit. Here are some issues to put into consideration before signing any partnership deal.
- If you live in a community property state, have every business Partner’s spouse sign the partnership/ operation and say amendments. The spouse presumably has an ownership interest in the business, and you want then to agree to the partnership/operating agreement. This is especially Important regarding the method of valuing the business when buying out a partner in the event of a divorce.
- Obviously, only go into business with those you trust. Vet Every thing in your business dealings, whether it be a contractor, a tenant, etc. This could mean conducting background check and calling personal references. This is especially true with your business partner(s) and is by far the most important way to protect yourself when entering a partnership deal.
- Consider getting separate counsel if using the same attorney as your partners(S) is presenting concerns.
- Address potential issues before they become issues talk about worst case scenarios. If your partner isn’t Willng to do so for whatever reason you have a wrong partner.
- Read and understand your partnership documents before you sign them. A good attorney can help you identify possible issues and present solutions, but ultimately you and your business partner(s) need to take ownership of the agreement and share a thorough understanding of how it governs your business.
Red flag warning your business partner will drag you down.
The fact that I am not a big fan of business partnerships doesn’t mean business partnership doesn’t come with benefits and advantages.
- From combined skills and knowledge.
- More business capital.
- Greater borrowing capacity.
- Taxes benefits.
But despite all this benefits it’s still reported that four of five partnership don’t work out. And probably 80 percent of business partnership ultimately fail. And if you want to make it as an entrepreneur you must strive to be among the 20 percent that succeed.
1. Your values conflict:
He might be the most moral person on the earth, but he/she can’t be your business partner. He might not only be a thieve to betray. In fact in most business betrayal the person that betrays you can even be the person feeling betrayed even threatening to sue.
It all falls on values.
You may think this only matters in marriage. But you’d be shortchanging the importance of a shared vision. Individuals are different due to their upbringing, the needs of their central nervous system and how they see the world. People has different needs and different desires. Men and women are different in someway.
But anytime your partner has loses sight of the bigger picture. Care more about is personal success than the cooperate success of the organization. Know it’s a warning sign.
2. Your business partner keeps offering problems, not solutions.
A solution oriented partner can be a valuable asset in financial management, product design, marketing and other key aspects of your joint business.
But what if a business partner seems to continually offer problems but never a solution. That’s a bad sign.
Good business leaders create a vision, articulate the vision. Passionately own the vision and relentlessly drive it to completion.Jack welch
3. Your business partner won’t sign an agreement.
A partnership agreement is useful whether you are dealing with a good or bad business partner. Because it helps map out partners roles as the company grows and what happens when it becomes successful. It also map out your exist strategy if your partnership goes soar.
4. Your business partner won’t tell the truth.
No one likes a liar, this even worse in the world of business as honestly between parties is a fundamental part of a successful business. If your so called business Partner can lie about a traffic, qualification’s, and personal finances, who is to say he or she will not lie about profit margins, gains and so on!
5. When your business partnership benefits are not equal.
Maybe one of you knows how to program, and the other is good at telling stories through marketing. Maybe you know sales, and your partner is a stickler for accounting and budget management.
On the other hand if you work with someone who has significantly less experience than you. Or substantially more… Only one of you benefits, this can turn into toxic business partnership. A healthy balance increases the chances you’ll both benefits equally, whether that’s in terms of professional development or company profits.
My best advice for you.
Again, if you’re in a partnership with a lot of turmoil, let it go. That’s the first thing, get out as quickly as you can.
Forget about money, you can always make money. But you can’t get your time back. The thing that sucks about it, is there is such a huge emotional drag on you it’s taking away from all the amazing thing you could be doing. I’m telling you, it is not worth arguing for $1,000 to $1million dollar. Let then have it and disappear.
Start your own business, start your journey, and let it’s go. Don’t argue, don’t go to court. Don’t speak to attorney. No one wins in that instance, just let it go and be a better person.