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