Most people enjoy sharing major life accomplishments with significant others. For passionate entrepreneurs, this desire extends far into their financial lives.
Business partners should lend much more than just another crying shoulder, sounding board, or listening ear, however. Those wanting to form winning business alliances should heed the following helpful hints:
1. Look beyond yourself
Consider only prospective partners who possess attributes that complement your own. Ensure that any potential business association shares your basic sense of business ethics. Mutual trust and respect are indispensable to the long-term success of any joint commercial endeavor.
2. Do Not Overlook Close Acquaintances
Much truth underlies the old adage that you should avoid going into business with close friends and family. Having some prior knowledge of your prospective partner’s personality and character is a major advantage of such partnerships, however.
Those opting to pursue this partnership format should give themselves the best of both worlds by having an objective observer present during all business meetings and discussions. This helps keep things on a purely business level by inhibiting emotional interference and personal biases.
3. Delegate major responsibility in a realistic manner
Clearly define each partner’s role in the business relationship early on. Stipulate all shared obligations with written specificity.
4. Guarantee mutual gain and “win-win” outcomes
Structure the business so that all principals’ interests always remain in full alignment at all times. This averts inherent conflicts of interest and internal rivalries that can render even the best-laid business plans useless. As an aside, an LLC can be formed along with articles of incorporation (operating agreement) that easily divide up equity so all parties are protected.
5. Make communication a “No Procrastination” zone
Conduct frequent exchanges of relevant ideas and information via email, phone, or face-to-face contact. A regular “mini-planning” morning routine wherein each partner may express any issues or concerns is an ideal forum within which this may be accomplished. Decide precisely who will do what for the remainder of the day.
6. Feel each other out
Devise means of becoming better acquainted with a prospective partner with whom you have no prior association. Hire him or her as a freelancer or independent contractor before making a final decision to form a business union. This strategy permits close observation of that person’s work ethic and individualized business style – without making a big mistake.
7. Maintain an open business “marriage”
Like marriages, business partnerships frequently change with time. Altered external economic environments or personal circumstances often mandate corresponding adjustments in business agendas. Keeping this in mind during commercial partnership establishment helps avert subsequent rifts and needless conflicts.
8. Construct an effective exit strategy with well-oiled hinges
Although unpleasant to contemplate, you must consider the possibility of irreconcilable differences developing between yourself and your business partner. Always plan for this eventuality by drafting a clearly delineated partnership dissolution procedure.
9. Handshakes are hardly worthwhile
Never form a business partnership based upon verbal agreements or a handshake. Although goodwill often abounds initially, things can take an instant dive in the blink of an eye. Avoid misunderstandings by reducing all pertinent partnership terms to writing. Like prenuptial agreements, such legally binding contracts protect both parties.
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