“Castles made of sand fall into the sea eventually.” While Jimi Hendrix was probably not singing about business partnerships, he could have been. If you don’t build your partnership on solid foundations, it will probably succumb to the waves.
Most business partnerships fail
You should choose your business partner as carefully as you pick your life partner. Magazines often report that over half of all marriages fail. The failure rate for business partnerships is even higher, perhaps as much as 80%.
Here are some things to consider before agreeing to enter a business partnership:
- Be sure you are not happier alone: As a sole business owner, you answer to no one. When things go well, you take the credit. When they go badly, you take the blame. The buck stops at you. Be sure you are willing to share decisions and responsibility. Be sure you are ready to sacrifice your freedom.
- Clarify what you both bring to the relationship: Business partnerships do not necessarily need you to contribute equally. Be clear about what you can give beforehand and do not have unrealistic expectations of each other.
- Put it in writing: You cannot just move in together in business. If you want someone to become your partner, you need to make it formal. A well-drafted partnership agreement is crucial. Seek legal help to ensure it covers all situations.
- Plan for a break up: Do not assume you will be one of the few business partnerships that last forever. Include provisions for terminating your relationship in your partnership agreement.
A successful business partnership will require commitment and hard work from both partners. You are bound to have your differences and ups and downs. The stronger your foundations, the better your chances of surviving.