Business partnerships have been an important part of business success. The reasons are simple: complementary skills, shared expenses, and the idea that one person with financial capital can create synergy with someone else's intellectual capital so that both benefit.
In theory, a partnership is a good way to start a business. However, in my experience, it is not always the best way in which an entrepreneur can organize his business.
The difficult thing about most societies is that they are like marriages, and if you know the statistics, you know that more than half do not survive. Making a marriage work involves managing a number of relationship issues: ego, money, stress, and expense management. Think about it and you will have an idea of the work that is required to keep a society afloat.
If you are thinking of attracting a partner to undertake, consider the following mistakes that you should avoid:
1. Share capital instead of profits: When you share your own capital (be it money, resources, information or property) you are automatically giving part of your company. In a perfect world, your partner is a person of integrity and will not be tempted to run away with him. However, the world is not perfect, so you have to be very careful. In the contract it specifies that they will share the expenses; this way it will be more difficult for the other not to 'wash their hands' if things go wrong.
2. Partner with someone just because you don't have the budget to hire staff:This is a society killer from the start. The scene is almost always the same: Bob has a business idea and Fred has entrepreneurial skills, but Bob has no money to hire Fred as an employee, so they decide to share responsibilities, expenses and profits. If this is your case, consider hiring him or making a separate contract.
3. Not have a written and signed contract: Due to the nature of the companies, all details and obligations must be clearly defined and put in writing, being accepted by both parties. It is advisable to do so with the help of a professional lawyer with experience in the field, chosen by all partners.
4. Skip a limited partnership: One of the main obstacles in agreements between partners is the assumption of obligations one on the other. One way to avoid these problems is to create limited partnerships, where one partner is not responsible for the actions and obligations of the other. Again, to achieve this point, it is advisable to hire a specialized lawyer.
5. Not having an exit strategy: Marriages between wealthy people begin with a prenuptial agreement. You should do the same in your business partnership. In the agreement, define the exit terms that allow you or your partner to leave the company, as well as options for the other party to buy the rest of the business, in a way that benefits you in that situation.
6. Expect the friendship to survive the breakdown of society: Let's see it again as if it were a marriage: How many former partners are still true friends? Not many. So don't associate with a friend expecting that they will continue to be if they stop being partners. It may sound good to do business with your friends, but remember that in the business world, friends come first and friends second.
7. Have a 50/50 partnership: Every business, even corporations, needs a boss. If you bet on including a partner, split the business 60/40 or 70/30. Thus, you and the business have a person in charge of overall control.
As a final note, I leave you an interesting solution to a society problem of one of the aforementioned brands: Baskin-Robbins.
When Burton Baskin and Irvine Robbins considered partnering in the ice cream business, Robbins' father cautioned against it, thinking that the compromises each would make would kill the potential of the product. So both men worked their own businesses before combining the five Robbins stores and the three Baskin stores under one name, which was decided by flipping a coin. Only after launching and running their own separate businesses did they realize that the partnership would work.
This is a very effective formula to choose the best partner. And if it worked for these two pioneers who were very successful in retail, it could work for you too.
Fountain: https://www.entrepreneur.com
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