What you need to know before you join forces with a business partner

By Simon Milne

Some years ago I was a member of a professional group of chief executives.

We met once a month to learn from each other, share our strategic plans and discuss our operational issues. We were all chief executives/shareholders involved in business partnerships with one or two other people.

The biggest challenges we faced were the working and personal relationships with our business partners. One of the women in our group used to say the following – and it became the group’s mantra:

Before you take a partner, TAKE POISON!

At the time I agreed with her. I was in a partnership with two other people who had stopped speaking to each other – completely. No management meetings. No annual planning. No working together. Eventually they specialised in their different areas and we were fortunate to sell the company a few years later.

So I was on board with the “before you take a partner, take poison” view.

However, if you stop and reframe my partnership story, it goes like this:

1. There would have been no company if we had not become partners;
2. We would never have learned about partnerships without this business experience; and
3. We have all gone onto new partnerships since then.

The truth is, small partnerships are vital to entrepreneurial businesses, especially in the creative and IT industries. Small teams work. The business literature is full of examples of successful partnerships: Walt and Roy Disney; Bill Gates and Paul Allen; Steve Jobs and Steve Wozniak; Sergey Brin and Larry Page … the list goes on.

If you are looking at forming a partnership here are a few tips that may help you:

1. Write a business plan first

Too many people form a partnership before they have written their business plan. Nothing focuses the mind, and reveals your vision and values, like writing a business plan with your partner(s).

2. Spend a lot of time together

This may be hard to do if you are fully employed, but use the weekends and your free time to get to know each other. You are going to be spending a lot of time together and knowing that you enjoy each other’s company, and respect each other’s views, is crucial. A shared sense of humour is highly desirable.

3. Put a partnership agreement in place

Nothing can ruin a partnership like the ending of it. Make sure you cover all outcomes in this essential document.

4. Define your individual roles and business processes

Professionalise early! Write your job descriptions and decide how you will work together. Map out your weekly, monthly and quarterly meetings, and stick to a professional way of working together.

By putting the right building blocks in place before you form a partnership, you are more likely to succeed in growing a robust, successful company together that could become one of the most satisfying business experiences of your life.

Simon Milne is a business coach and author of Breakfast With A Business Coach. He can be contacted at simonkmilne@yahoo.com.au or via www.simonmilne.com.