Making your business partnership work can be one of the greatest pleasures of having your own business. With that in mind, if you’re planning to start a business venture with a friend, family member or associate as your business partner read on.

Don’t assume that everything will be hunky-dory from day one. After all, business partnerships go through rough patches too, just like marriages. So make sure you take certain steps to ensure yours doesn’t end in heartache and regrets.

How to make business partnership's work

Take the following steps and your business partnership should work from day one:

Share similar values

Check beforehand that you and your business partner share the same vision, dream, goals, etc. A potential conflict where your partner does not share the same goals, core values and work ethic, for example, can spell disaster.

A pre-existing success track record always helps

Play it safe

Choose a partner with whom you’ve had a past success track record and a generally positive business experience. Now, this doesn’t mean that choosing the right partner means having worked before is compulsory or you have to have a share with them in running a business in the past.

It simply means that both of you have a track record of going through similar business experiences successfully. This will help relate to each other’s strengths, weaknesses or, say, limits. Plus, it’s best to look for a partner who can handle conflicts like you can, who has achieved similar goals and survived through rough patches, just like you.

Explain and define each partner’s role within the partnership

This helps to eliminate any potential disagreements, resentments, reservations or conflicts down the line. In fact, by clearing defining each partner’s responsibilities, scope, duties, etc. customers and employees can also benefit. Remember knowing who is responsible for overseeing which aspect of the business is very important.

Choose the appropriate business structure

A business partnership may be forged as a limited liability, limited or general one. However you may also organise it as a C corporation or S corporation partnership. Each one brings a distinct set of advantages and disadvantages, so talk to your business or financial advisor to determine the right one.

Go with a partner who has a complementary skill set

Having a partner with complementary skills to yours means you can effectively double your strength as a team. For instance, if you’re a generally shy and somewhat introverted tech person looking to start an online business, it would be preferential to choose a partner who has good people, marketing and sales skills.

Be honest with each other

Don't sweep matters under the rug!  you’re both going to hurt the partnership more than anything else. Talk things out openly but respectfully, sharing your opinions openly and honestly, and ironing out disagreements when they occur.

Put everything in writing

Even if your partner happens to be your closest mate from high school, you need to draft the appropriate legal documents and put everything in writing. This is a no brainer!

These legal documents should have everything from the business structure and capital contribution to the business. Also, how decisions will be taken and how disputes will be resolved. Or, for example, what happens if one of the partner suddenly decides to ditch the business and move on. Consult a legal or financial advisor and put everything in there that could possibly go wrong. This way you’ll know exactly how to deal with it, if it ever comes to that.

Conclusion

Some of the above points can certainly be tough to discuss with your partner, especially when you just can’t wait to get the business going. However, you need to lay the foundation for a strong, fruitful and lasting business relationship.

If you don't you may have to later deal with the heartache of a failed business partnership.

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Running your business in partnership with somebody else is a very powerful and effective way to run, manage, and grow your business. However, if done incorrectly, choosing the wrong partner, managing that partnership incorrectly can be very messy and a costly heartache for all concerned. In this podcast, I'm gonna share with you the steps that you need to go through in order to have a very effective and prosperous partnership.

You are listening to the I Hate Numbers Podcast with Mahmood Reza. The I Hate Numbers podcast mission is to help your business survive and thrive by you better understanding and connecting with your numbers. Number love and care is what it's about. Tune in every week. Now, here's your host, Mahmood Reza.

Hi folks. Welcome to another weekly episode of I Hate Numbers, the podcast with the primary mission of improving your financial awareness, helping you up your money mindset game, help you save tax, make more money, and time. What a fantastic combination we have there. Let's crack on with a podcast. Undeniably,

one of the greatest pleasures of having your own business is choosing the people you get to work with. With that in mind, if you're planning to start a business venture with a friend, a family member, or an associate as your partner, then don't assume that everything will be rosy and hunky-dory from day one.

After all, business partnerships go through rough patches too, just like marriages, just like any form of partnership. So it's important to take certain steps to ensure yours doesn't end in heartache and regrets. Follow these following steps and your business partnership should work from day one. The first thing is similar values.

It's never a good idea to jot down a single word in your plan unless you know beforehand that you and your business partner share the same vision, the same dream, the same goals, the same integrity. A potential conflict where your partner does not share those same goals, core values, and work ethic, for example, can spell disaster.

Number two, a preexisting success track record. Now, play it safe. Choose a partner with whom you've had a past success track record and a generally positive business experience. Now, it doesn't mean that choosing the right partner means you've got to have worked with them before, or it's compulsory, but you've got to have shared experiences in running a business before.

If you don't have those shared experiences in running a business before, do you have similar things that can connect to help you power that way through? It simply means that both of you have gonna have a track record going through similar experiences successfully, so you can immediately relate to each other's strengths, weaknesses, or limits.

Plus, it's good to look for a partner who can handle conflicts like you can, who's achieved similar goals and survived through rough patches just like you. Clarity of obligations. It's important that you clearly explain, define each of your roles and obligations. This is gonna help you eliminate any potential disagreements, resentments, reservations, or conflicts down the line.

In fact, by clearly defining each of your responsibilities, the scope, the duties, your customers and employees can also benefit knowing who is responsible for overseeing which part of the business. We don't want that confusion arising. Business structure is also another thing to consider. Now, your business partnership can be formed as a limited liability partnership.

It could be a general partnership. Each has got its own discreet set of advantages and drawbacks. So make sure you talk to your business advisor. Make sure you talk to your accountant to make sure you both understand and have got your business structure set from day one. So let's recap what we've got so far, sharing similar values, integrity, visions, and goals.

Ideally, a preexisting track record, shared experiences that you can both bring to the party helps. Make sure you clearly define what each other's roles and obligations are. Choosing the right business structure from a financial and a risk perspective is also a good thing to do. Let's continue with the rest of the things that we need to go through to have that successful, harmonious partnership.

Choose a partner with a complimentary skillset. Now, having a partner with complimentary skillsets means that you can effectively double your strength as a team. For example, you may be generally shy and somewhat introverted, a tech expert perhaps, somebody who's good at back office functions. You may be looking to start an online business, so you will choose somebody who's got good marketing skills, good sales skills,

and, therefore, that's a good marriage. Think of it like somebody who owns a piece of land. They might team up with a builder who can develop and exploit that piece of land. That's a good combination. Honesty. I can't stress this enough, you need to be dead honest with each other. Sweeping matters under the rug is gonna hurt the partnership in the short term and the long term.

You need to be able to have those honest and open conversations. Be respectful. Be kind, but if you cannot share your opinions openly and honestly, and ironing out those disagreements, trouble is going to lie ahead. If you are friends, if you do know each other, leave that at the back door, and once you cross that line into your business environment, make sure you treat it as not a hobby, but as a business.

Finally, put everything in writing. Now, that doesn't mean that you necessarily distrust your partner, but it produces clarity. Even if your partner happens to be your closest friend from school, somebody that you socialise with on a regular basis, you need to draft the appropriate legal documents and put everything in writing.

I cannot stress this enough. If your partner is unwilling to put that in writing, for me, that's a red flag that's gotta be raised immediately. These legal documents should have everything from the business structure to how much money each party is gonna contribute, how decisions will be made. What happens about resolving deadlocks?

How do you resolve disputes? What happens if one party decides to move on? Somebody else wants to stay? What happens about bringing somebody else into the partnership? Make sure you've identified those headlined items in the beginning and get a framework drawn up at the very beginning. Make sure you've got somebody competent, legally or financially, who can put that in writing for you.

What I would always suggest our clients is, imagine you've got lots of money coming through your bank account, would anything change? It's much easier to have those conversations when no money is involved and not address that. So make sure you have it in writing. Make sure you've got clarity. Now, to round up folks, and some of these can be slightly difficult to discuss on your part, especially when you're both enthusiastic to get things going.

Especially when you both think at the beginning that nothing can go wrong. And when I say both of you, remember, a partnership can involve more than one person. It could be 20-30 - you decide. The same principles will prevail. You may find it awkward to discuss financial matters. You may find it awkward to discuss if things go wrong, but you need to be able to do that.

You need to lay the foundation for a strong, fruitful, and lasting business relationship. Otherwise, you're gonna have to later deal with that down the track and pick up the pieces of a failed partnership. Folks, I hope you've got some value from this podcast recording. If you have, I'd love to hear your comments and your feedback.

Please do share them with me and if you know anyone in your network who you feel can benefit, and I'd love it if you could share it with them. Until next week, folks, happy partnering. We hope you enjoyed this episode and appreciate you taking the time to listen to the show. We hope you got some value. If you did, then we'd love it if you shared the episode.

We look forward to you joining us next week for another I Hate Numbers episode.