Before You Add a Partner

So, you are thinking of acquiring a partner in your business. Maybe you want a partner to spread the workload or liability. You could have differing areas of expertise and want to become a “one-stop shop.” Or maybe you’re looking for someone to take over when you retire.

Either way, think before you get “engaged” and sign those final papers! As Lamar Curtis of IAG put it, “a partnership is like a marriage without the good parts.” Before moving forward, consider these suggestions.

  1. Each party invests the same amount of money.
  2. A change in equity equals a change in authority.
  3. You have to trust all parties involved, even minor partners.
  4. An exit strategy must be as clear as possible before entering the partnership
  5. Be sure a full-fledged business plan is in place, including all stages of the business.
  6. Get a signed management agreement from all parties involved.
  7. Work with an HR consultant to predict behavior and discuss potential hotspots.
  8. Expect to invest 20% more money and 20% more time.

These pointers can come in handy even if you are considering a strategic business partnership or affiliation. As we all know, “breaking up is so very hard to do.”