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