Partners

Aside from law firms and medical practices, the number of businesses that

have partnerships more than 10 years old is almost zero. A partnership

conflict ranks as the second leading cause of stress for small-business owners

behind cash-flow problems.

When we bring someone into our business, we are granting them ownership,

authority or rights we can’t easily revoke. Even the really good partners will

add layers of complexity, which makes it vital to examine your reasons closely

before taking on partners. So, why do we do it?

It helps us share the workload, the responsibilities and the risk. A partner

should bring complementary skills, for example he’s a pragmatist and I am a

visionary, or I’m excitable & emotional and he’s level-headed and rational.

Partners should bring new ideas and strategies and can act as a sounding

board. Some partners bring a new network of connections, others bring money

to the partnership.

But we must examine more closely the reasons we think the above scenarios.

Does it really mean I am scared and don’t believe I can do it myself. I am not

sure I can do it alone or I have a hard time making decisions. I don’t have any

money and don’t want to borrow it. And of course, he’s my buddy and we can

hang out together!

Every facet of a partner’s life affects us and our business. Changes in mood,

personal finances, family lives, health and aspirations are among many

potential sources of future conflict. Decisions being made will not only affect

your life, but the life of your partner.

Partners can be expensive. We must share profits and proceeds from the

future sale of the business and the partner you take on today, can be different

in the future. An example of this, is your partner wants to retire or dies, your

partner will now be a spouse or one of their kids.

Lastly, Partnerships are easy to get into and hard to get out of. We take on

partners for the near-term benefits and often cannot escape the long-term

consequences.

But if you feel overwhelmingly to take on a partner, it can work, but not

without a a well thought out legal deal. Things that must be discussed and

written to avoid issues would be…………..

Who is responsible for what duties? Who is the Boss? What happens if a

partner leaves? What happens if the partner gets a divorce or dies? How will

profits be distributed (payroll) rate of pay etc? Is there an exit plan? What if

the company fails?

In my opinion, partnerships can bring complexity to business that we may be

better off without them. Before taking on a partner, examine your real reasons

for wanting one. If you decide you must take on a partner, don’t formalize any

arrangements until you have had the tough discussions in front of a qualified,

experienced business attorney.

Additional note…………..

Strategic partnerships are different…..

Strategic partnership

A strategic partnership is a relationship between two commercial enterprises, usually

formalized by one or more business contracts. A strategic partnership will usually fall

short of a legal partnership entity, agency, or corporate affiliate relationship. Strategic

partnerships can take on various forms from shake hand agreements, contractual

cooperation's all the way to equity alliances, either the formation of a joint venture or

cross-holdings in each other.

1. Strategic Partnerships Give Your Business a Competitive Edge

2. Strategic Partnerships Give Your Business Access to Additional Resources

3. Strategic Partnerships Grow Your Customer Base

4. Strategic Partnerships Give Your Business Access to New

Products/Services

5. Strategic Partnerships Help Your Business Reach a New Market

6. Strategic Partnerships Strengthen Weaker Aspects of Your Business