| One of the best ways an entrepreneur can
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| | partners death. Having an exit strategy
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| find the investment money he or she needs
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| | will help you maintain your autonomy
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| to grow their business is by finding a
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| | your fate and that of your business
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| strategic or joint venture partner. In a
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| | remains in your hands, not your partners.
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| good partnership, each partner will bring
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| | 5.Map Out Your Mutual Expectations In
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| expertise or assets that the other party
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| | Writing
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| is missing, but that are necessary for
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| | Before you get started, and possibly
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| the business to be successful; for
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| | before you meet with your lawyer, prepare
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| instance: CASH!
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| | a plain English roadmap of the
|
| If done correctly, a partnership can be
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| | relationship between you and your
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| great a way to grow your company without
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| | partner. Some major advantages are:it
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| implementing difficult and time-consuming
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| | allows you to draft the partnership
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| changes to your business. A partnership
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| | agreement with your lawyer before
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| can help you increase your market share,
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| | presenting it to your partners lawyer;its
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| gain a new competitive advantage, and
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| | flexible structure enables you to
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| help you to respond and adapt more
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| | experiment with different relationship
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| quickly to change in the marketplace.
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| | configurations to see which one youre
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| But, business partnerships can be tough,
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| | most satisfied with;youll have a clearer
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| and getting out of a bad one can be worse
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| | idea of what you want from the
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| than an ugly divorce.
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| | partnership; andmost importantly, you can
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| In my practice, entrepreneurs often come
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| | clearly distinguish business issues from
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| to me when its too late. In a typical
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| | legal issues, and use lawyers only to
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| scenario, communications have broken down
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| | discuss the latter which will save you
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| between the partners, they have been
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| | money on legal fees.
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| kicked out of their business, money has
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| | This brings us to the next point.
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| been stolen, and everyone is about to sue
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| | 6.Get Legal Advice Early
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| everyone else.
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| | Get legal advice from the beginning. Let
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| Let me put this into tangible terms for
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| | your lawyer know what your goals are and
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| you. What I have found is that when I
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| | he or she will let you know what you need
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| help my clients outline their
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| | to do to get there. A lawyer can also
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| relationship with their partners in
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| | assess how realistic or beneficial your
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| writing before they get started, it will
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| | aspirations are. They can help you
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| cost them between $1,500 and $7,500 for a
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| | strategize your negotiations and plan
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| simple partnership. When clients do not
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| | what to ask for and when. Also note that
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| do this up-front work and hire my firm to
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| | the attorney representing the other side
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| sue their partner (or defend a lawsuit)
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| | is the one you should look out for. You
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| when things go bad, it can cost up to 10
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| | and your future partner should discuss
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| TIMES that amount in litigation!
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| | the business side of your relationship
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| What I have found is that when future
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| | first and, if possible, only introduce
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| business partners hash out the terms of
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| | lawyers later.
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| their relationship before they get
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| | 7.Dont Do Everything Yourself
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| started, they have longer and more
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| | A good leader knows when to delegate
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| successful partnerships, and they save a
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| | responsibilities. Dont try to do
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| considerable amount of money on legal
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| | everything yourself. Assuming youve
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| fees. To help future business partners
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| | already taken the steps to carefully
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| get the conversation started, I have
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| | choose reliable consultants and
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| created a Business Partners Questionnaire
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| | employees, communicate with those working
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| that helps future partners begin to
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| | for you. Lawyers, accountants and
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| outline their relationship in writing. To
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| | managers can provide an objective,
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| get your FREE copy, email me at
| |
| | specialized perspective and a more
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| Here are a few other suggestions to help
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| | realistic tone to what might be an overly
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| keep you and your partners out of court!
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| | optimistic plan. Having technical and
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| 1.Go Back to the Basics
| |
| | expert advisers on hand can also help you
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| Before you even start hunting for a
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| | understand financial and operational
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| potential partner or decide that a
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| | implications pertinent to both parties.
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| partnership is definitely the way to go,
| |
| | 8.Haste Makes (Costly) Waste
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| take a look at your business plan. Decide
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| | Its true, time is money. But ignoring
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| whether such a move is in line with you
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| | details and attempting shortcuts will
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| business goals. What are your
| |
| | likely cause delays or worse, bad
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| organizational goals? Would a partnership
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| | decisions when forming a partnership.
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| help you achieve these goals? Is it
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| | Remember, if your partnership blows up,
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| consistent with the objectives of your
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| | it will cost you far more time, money and
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| company? A partnership is not a magic
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| | heartache than if you do things right
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| bandage that will solve your companys
| |
| | from the beginning.
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| problems. If you feel that your decision
| |
| | 9.Dont Overlook Details
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| to partner is a defensive move, it maybe
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| | As an entrepreneur, you already have a
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| an indication of a core problem that
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| | knack for seeing the big picture. Its the
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| should be fixed within your company, not
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| | details, however, that will add value to
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| externally. Similarly, dont rush into
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| | your vision in the long run. Covering the
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| partnership because you rely on one to
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| | following bases will help buffer you
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| start your business.
| |
| | against uncontrollable changes in the
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| 2.The Deadly Es: Ego & Emotion
| |
| | market, operating costs, and even
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| The deadly Es can trap you in a
| |
| | sentiments between you and your partner.
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| potentially awkward situation with your
| |
| | Before you get started:establish the
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| partner. Surrounded by a myriad of
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| | objectives and expectations of each
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| official documents and important
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| | partner;determine each partners
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| decisions to be made, your ego can cause
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| | contribution in terms of funds, skill and
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| you to make claims and opinions that can
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| | time;assess how much revenue will be
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| come back to bite you later on. For
| |
| | allocated relative to the amount and type
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| example, by distinguishing yourself as
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| | of work done;assign the roles and related
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| the companys official decision maker, you
| |
| | tasks of each partner; for example,
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| become responsible for your partners
| |
| | decide who will manage the partnership,
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| decisions too. Just as dangerous are your
| |
| | who will get training and hire employees,
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| emotions, which can lead you to form
| |
| | etc.;form evaluation objectives and plan
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| unrealistic expectations or impromptu
| |
| | ways to monitor and assess performance;
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| promises or commitments.
| |
| | anddetermine a procedure to resolve
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| 3.Dont Ignore Possible Opportunities/Stay
| |
| | problems when things break down; for
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| Flexible
| |
| | example, mediation or arbitration.
|
| Cash-strapped entrepreneurs have a
| |
| | 10.Trust Your Gut
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| tendency to stop their search for a
| |
| | My present partner excluded, I have been
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| partner once they find the first person
| |
| | guilty of some bad decisions about
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| who demonstrates an ability to write a
| |
| | business partners. I was involved in a
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| check. Remain uncommitted until you sign
| |
| | partnership where I owned and managed an
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| an agreement with your potential partner.
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| | investment property in a ski resort with
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| Actively cultivating your alternatives
| |
| | two other people. My partners were social
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| can give you a better perspective on the
| |
| | acquaintances whose company I enjoyed
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| partnership process and allow you to ask
| |
| | very much in that type of setting.
|
| yourself, is this partnership truly the
| |
| | However, throw money, emotions, power,
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| best option? Keeping your options open
| |
| | and economic risk in the mix, and things
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| can help you compare the relative
| |
| | quickly got tense.
|
| advantages and disadvantages of each
| |
| | The first indication that the business
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| alternative, including that of a
| |
| | partnership might not be a good one was
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| partnership. Not only does this prevent
| |
| | in the very beginning. We were sitting in
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| you from devoting excess time, money and
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| | a quaint Vermont restaurant and one of
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| effort on the sub-prime partner
| |
| | the partners threw a temper tantrum about
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| candidate, but you get the assurance that
| |
| | making an offer on a property we were
|
| whatever decision you made was the best
| |
| | considering. What was a very logical and
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| one.
| |
| | arithmetic decision for me, was a very
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| Also, consider possible opportunity
| |
| | emotional one for this person. After the
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| costs. Along with the benefits of a
| |
| | outburst, I had a bad feeling about the
|
| partnership, you also assume liabilities,
| |
| | interpersonal dynamics of the
|
| like your partners competitors. Will this
| |
| | partnership. I decided to go ahead anyway
|
| fact conflict with potential
| |
| | because the economic prospects were
|
| opportunities in the future?
| |
| | outstanding.
|
| 4.Form an Exit Strategy Before You Get
| |
| | Sure enough, in less than a year we were
|
| Started
| |
| | not on speaking terms. Luckily, before we
|
| Be realistic. Conflict is inevitable and
| |
| | got started, I insisted on an iron-clad
|
| you never know how severe it may get.
| |
| | partnership agreement that had a
|
| Although it seems cynical, you should
| |
| | mechanism in it for me to get out. I
|
| think of how youll exit from the
| |
| | ended up making money on the investment,
|
| partnershipbefore you get started.
| |
| | but not enough to pay for a years worth
|
| Consider it staying prepared for your
| |
| | of arguments, stress and distraction from
|
| next opportunity. While you and your
| |
| | my law practice. I didnt trust my gut and
|
| partners are still on good terms, its
| |
| | it cost me in the long-run.
|
| crucial to determine how to allocate your
| |
| | A business partnership is truly a
|
| business assets in case you and your
| |
| | marriage. As all marriages go, when
|
| partner decide not to work together
| |
| | things are good, theyre great, and when
|
| anymore. You should also agree about what
| |
| | theyre not, look out! If you get a bad
|
| to do with the business or assets in case
| |
| | feeling about your future partner, trust
|
| of an untimely termination, such as a
| |
| | you instincts, they are usually correct.
|
