One of the benefits of starting your own business is the freedom to pick the people you're going to be working with. However, if you're thinking of starting a company with a close friend, family member, or former business partner, don't presume that all is going to be easy, only because you know each other. Like relationships, corporate partnerships also run into rough waters.
You should ensure the following tips to ensure that your partnership firms stay on course.
1. Share the same values.
Don't write the first word about your business plan until you know that you and your partner share the same hopes, ambitions, and vision for your new company. Does your wife dream of launching the next Starbucks, while you're dreaming about a part-time catering company that gives you plenty of time with your family? You and your partner need to share the same core beliefs, ambitions, and work ethic if you want the company to succeed.
2. Choose a partner with complementary skills.
If you and your business partner have different strengths, you're going to double the power of your startup team right off the bat. For example, a shy tech specialist who wants to start an Internet company would do well to find a sales, marketing, and human skills partner. In this way, both partners will concentrate on doing what they love and are good at.
3. Have a track record together.
If you and your business partner have different strengths, you're going to double the power of your startup team right off the bat. For example, a shy tech specialist who wants to start an Internet company would do well to find a sales, marketing, and human skills partner. In this way, both partners will concentrate on doing what they love and are good at.
4. Clearly define each partner’s role and responsibilities.
If you and your business partner have different strengths, you're going to double the power of your startup team right off the bat. For example, a shy tech specialist who wants to start an Internet company would do well with a sales, marketing, and human skills person. In this way, both partners will concentrate on doing what they love and are good at.
5. Select the right business structure.
You have to ensure that it is the right form of structure for your business. You can organize a partnership as a general partnership or a limited partnership. However, you may also organise your business structure in the form of a Private Limited Company or a public limited Company after careful consideration of the facts, pros, and cons of each type of entity. Each form of business has its advantages and disadvantages in terms of liability, taxes, and continuity. Talk to an attorney or other experienced advisor to help determine which form of business is right for you and your partner.
6. Put it in writing.
Whether you are getting into the business with a friend, family member, acquaintance, business associate, or even your school friend, you need to draw up a legal document (partnership deed) about the corporate structure, capital commitment to the corporation, how decisions should be made and conflicts resolved, and what happens if one partner decides to leave the company. Thinking through all the things that might go wrong and how you're going to deal with them makes it easier to deal with any difficulties that arise.
7. Be honest with each other.
Hiding your true emotions, if you don't want to harm your business partner, can cause more trouble than it removes. For order for your relationship to succeed, each of you must feel confident in publicly expressing your views and resolving any conflicts that occur. Sweeping your problems under the rug only leads to frustration and anger that can ruin your partnership — and your company.
These can be hard issues to address, particularly when you're excited about your startup and can't wait to get started. But unless you take the time to lay the groundwork for a sustainable business relationship, your new company can never get off the ground.
