There are a lot of entrepreneurs who like to start a business with a partner with thoughts that it will be easier, less risky, and that you will have someone to lean on. What is a clear fact based on statistics, a partnership that is formed without a thorough due diligence and clarity of responsibilities & roles is likely to fail. Trust me...I know first hand! So what makes successful partnerships work? I am going to share my experiences and opinions.
According to the United States Small Business Administration (SBA), businesses with multiple owners are more likely to survive longer than those who go out on their own. The basic new start-up stat everyone uses regarding 66% of new businesses fail within the first year or two is a motivating factor to cover up this statistic the best you can. Some think going into a partnership arrangement helps reduce the probability of being a part of this stat...and I agree under the right circumstances. It is a fact that partnerships are the simplest and least expensive of co-owned business arrangements. Forming a partnership can either be a good or bad thing, depending on the parties and circumstances involved. To Consider
Some pros
Some cons
Before entering into a partnership, it would be best to first determine whether or not you are suitable for this type of arrangement and, if so, to thoroughly investigate possible business partners. Is your prospective business partner a good match? A business match is much like a marriage. Just as one would normally take great care in the selection of a mate, you must be careful with a prospective business partner. Here are some questions to ask yourself to find out if you’re compatible:
Avoid any potential problems by making sure duties and responsibilities of each partner are detailed in a legal agreement. This agreement should include how much capital each will contribute; who owns what; how decisions will be made, profits will be shared, disputes will be resolved; a buy-sell agreement; and who will be entitled to what if the partnership doesn’t work out. Be sure to involve a lawyer and an accountant from the outset to help form your partnership and to draw up legal agreement to avoid unexpected circumstances. No doubt, deciding whether or not to work under a partnership arrangement is a major decisions for you, your family, and your career. A lot rides on how the partners handle everything that is involved with the business and what decisions are made.
1 Comment
4/2/2018 09:29:55 pm
I certainly learned my lesson on a partnership that didn't work out. A lot of your points are so true. I would add that if a partnership is going to work, it is important that each truly respect one another and relies on the other equally. In my case resentment built up after my partner started slacking in his job, stopped coming to meetings, and literally just felt he was entitled even though he was not pulling any weight! This was not the case when we started out.
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AuthorScott E McGlon is the President of McGlon Properties, LLC and the author of many blog posts on MP Blog. He has been a serial entrepreneur, entrepreneur-in-residence, investor, and president/CEO of many successful start-ups since 1998. “Success is walking from failure to failure with no loss of enthusiasm." - Winston Churchill "The few who actually
go out and take extraordinary initiatives are the envy of the majority who sit back and just observe." “The LORD makes firm the steps of the one who delights in Him; though he may stumble, he will not fall, for the LORD upholds him with His hand.” - Psalm 37:23-24
“Keep away from people who try to belittle your ambitions. Small people always do that, but the really great people make you feel that you, too, can become great.” "It is more important in what you become than what you achieve. What are you going to become in pursuit of what you want?" - John Marsh, Marsh Collective
“Work harder on yourself than you do on your job" - Jim Rohn
"The secret to success is very simple: EVERYDAY if you do quality work, take initiative, act on innovative thoughts, and are assertive in your actions all backed by faith, the dividends will consistently flow your way." - SEM
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