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Partnering Up: What to Consider When Entering a Partnership


Forming a partnership is one of the biggest steps an entrepreneur can take. You’re choosing a person to share your business, money, time, and decisions with. There are so many things to consider, so many pros and cons to weigh.

I’ll try to lower your stress level with some tips to help you decide who to partner with, and how to move forward once that partnership is formed.

How long should you know another businessperson or company before considering pairing up?

The length of the relationship isn’t the most important factor when choosing a partner. It’s more important to do all due diligence regarding researching the potential future partner (consulting references, conducting a background check, etc.). It certainly does help to know the person’s true personality before getting involved in any business partnership – but you need to get to know your partner, whether you’ve been acquainted for a month or twenty years. Don’t default to trusting a long-term relationship on length of acquaintance alone.

Once you’ve had a chance to become familiar with the person, it makes the decision to partner easier because you can determine how your future working relationship might evolve, based on actual experience with the person. A previous relationship is important, but it should not be the determining factor when choosing a partner.

What are the signs that a prospective partnership is a good match?

Telltale signs of a good partnership are something to keep your ears and eyes open for. Here are a few:

  • You had a previous working relationship that functioned well.
  • You know others who have worked with this person, and they provide good recommendations.
  • You have similar goals for the future direction of the business.
  • You have similar values.

Here are some bad signs to look out for:

  • You have worked with the person in the past, and it was a negative experience.
  • You have heard disappointing things about his work ethic.
  • You have vastly different views of the company’s future.

In the end, complete the most extensive vetting process you can. Gather all the information there is to find, and trust your gut.

How do you manage the paperwork process?

It’s extremely important to look into the background of your potential partner to ensure he is who he says he is. Even if he appears to be a good, honest person, it’s still very important to do this because people often misrepresent themselves.

It’s also important to have an attorney oversee the entire process and all legal documents. This will ensure that all of the necessary paperwork has been submitted properly. You’ve done a lot of work to get this far – make sure the little details and legalities are taken care of by a professional. Your work is too important to leave to chance – or a potentially unscrupulous partner.

After you decide to become partners, what’s next?

Once a determination has been made to form a partnership, the process can take anywhere from one month to four months. Generally, if the partnership is well-formed, the integration of the two partners into the business model is seamless and takes less time than more complicated relationships. In my experience, when I’ve formed successful partnerships, onboarding has generally been an easy, pain-free process.

Starting your partnership has been a complicated and intensive process. You should be happy with your choice of a partner and excited about the future you’re building together. Once you have completed the logistical part of forming a partnership, start moving forward and accomplishing the goals you’ve set. You’re a team now; get moving!

  • http://twitter.com/Chen_Dogg Jamie Chennells

    Are there any shortcuts when it comes to ‘background checks’? When it comes to rapid expansion (in the often cash-strapped startup world), it’s often difficult to keep a tight grip on who’s joining the team, and which potential partners are as credible as they sound. Coupled with high development expectations and pressurised user acquisition, it can be easy to lose the pulse… It would be great to have a second opinion on decisions from a 3rd party.

  • http://www.callbox.com.sg/ Jayden Chu

    It is always good when the initial money committed to the partnership could return an profit. Isn’t that the purpose of every business?

  • RB

    Hi, I found this article good to start with. What benchmark do you think it should be in terms of profit and profit sharing.

    I am in partnership with somebody and it’s been line around one and a half year that we are working together. We’ve a team, but not the team in the same expertise that I am working in. May be I am lacking the team building things but, I work form some client myself and share around 50-60% of may income with the company. In return, there is nothing I am receiving back from company.

    Do you feel it’s a healthy partnership?

    I sometimes feel that my partner is cheating on me. He is hiding things and projects he is working in. Monetarily too, seems like he only discloses income (only what is required to be disclosed) not more than that.

    Can you please guide me on how to test this? I don’t want to quit at this point of time, and start over again. All I want to do is know what exactly he is looking for.

    Regards,
    RB

  • disqus_IG93K4Xq6q

    http://www.urbanbizpartnership.com is a really good site that protects your personal, professional and private identity until you’re ready connect with a potential partner.