Relationships can be so easy to leap into, especially in your personal/social life. You tend to seek out people with the same interests, opinions, values, and outlooks on life as you. Like attracts like, and so forth. Your chemistry just clicks, you fall in “like”, and you hang out and have a great time together. Marriage and long-term romantic relationships are similar, but with the addition of a deep attraction, love and…well, all that other stuff I’d get in trouble for writing about. But you know where I’m going, so we’ll leave it at that.
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Business relationships are not to be jumped into blindly. They can be hard to get just right, because we have to fight against our natural desire to spend time with people who are just like us (and therefore totally awesome). It’s important that you and a potential partner have the same values and goals and that you get along and genuinely like each other. But what else do you need to look for in a potential business partner to ensure your partnership is successful? And just how do you go about setting up a partnership when you are so used to working by yourself?
As I recounted in my last post, I recently met a super cool CPA and small business consultant named Jason Howell. He and I totally clicked: He’s funny, friendly, energetic, and chock full of advice for small business owners. We sat down to talk about small business finance and money matters; this post is the second in a series of three based on that conversation.
Jason started out with the basics of forming a partnership, which will most likely come as no surprise. To set up a partnership, you need to:
1. Find the right person.
2. Put an agreement in place.
Like many things in life, easier said than done.
Find the Right Person
Put together a list of potential partners. Include clients, colleagues, former colleagues, people you’ve informally partnered with on projects, and friends. Now cross off your friends, or at least most of them. Unless you can be totally objective, it is very easy to overlook personality quirks and skills, or lack thereof, when you like and know someone very well.
Finding the right person, aka, the ideal partner, is hard. You not only have to get along with that person, but he or she must have skills that complement yours. If you’re a software engineer, partner with a sales person. If you’re a landscape architect, partner with a design/build company. Leverage the talents of other people to ensure your partnership, and thus each of your careers, grow and flourish. If you hire someone with similar skill sets, your weaknesses will be amplified and you will most likely torpedo your company’s growth.
Jason used to work in the music industry, so he gave me a great example of a successful partnership. A lot of musicians have personal managers, but very few have business managers. Those with business managers are serious about making it in the music industry. They recognize that they lack the skills to successfully negotiate record deals, concert series, tours, etc. Jason said the musicians with great business managers are most likely to hit it big.
Put Together an Agreement
There are two kinds of partnerships: a general partnership and a limited liability corporation (LLC). A general partnership is much like a sole proprietorship, while an LLC recognizes the company as an entity separate from the partners; it is probably the best way to go, since it offers the partners legal protection. With an LLC, you’ll put together an operating agreement that will lay out responsibilities, obligations, and how losses, expenses, and profits will be divvied up. It’s not super complicated, but it must be done right.
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Tags: business partnership, business relationship, general partnership, LLC
Posted in Business Development, small business | 4 Comments »
