As your business grows, you talk business with the right person, or opportunities present themselves, every business owner contemplates bringing on a partner to take them to the next level. There are so many advantages to partnerships that can be formed in the business and real estate world, but before you create that LLC together, there are some things you should consider.
As many success stories as there are about teaming up with the right people to scale your business, there are just as many business failures, relationships ruined, and money lost because business partners did not consider multiple steps along the way before joining together. This article is in no way an attempt to discourage partnerships, but just a call to consider, think, and discuss on your own and with each other to achieve what you want to do.
Do you need a partner?
Many times entrepreneurs think that the best way to scale their business is to partner up with anotherentrepreneur.Twicethebusinessleaders,meanstwicethebusiness,right?Inmostcases,no.
Usually it is not really a partner that a business owner needs, usually it is just someone to help run their business with them, a good number 2. This doesn’t have to be a partner in the business. This could just be an employee or multiple support team members.
Are you aligned enough to be business partners?
Most of the time when a partnership fails, it is because the partners are not aligned in their core values or their purpose for the business. Successful businesses need to have a purpose behind them, and if two partners are not aligned with their purpose the business will pull in two many directions. It is critical for the health of the business for any people in a partnership to have similar core values in order for the business to be aligned with its purpose.
As an example, one partner with a core value of giving to charity and another partner with a core value of making the most money possible, may struggle with making business decisions. This may seem like a far-fetched example, but I have seen businesses dissolve more than I’d like to say because of this exact example.
Are your goals now the same as the future?
Partners in business can outgrow one another. Before teaming up, make sure you and your partner discuss short- and long-term goals for yourselves and for the business. Make sure you are on the same page with things such as how many employees you want, how much time you want to spend in the business, and truly how big you want to grow the business.
We have all heard the saying, “some people can get you here, but they can’t get you there.” Some partners as the business grows may not want to leave “here” to get “there.” Make sure that you don’t only discuss those goals at the beginning, but throughout the business to make sure that you are on the same page.
Should you partner with friends or family?
Of course it makes sense to team up with a buddy or a family member to operate your business because you get along, have the same values, and want to help each other, but the thing that many people don’t consider is what happens when things do not go as planned. A question you have to ask yourself is, “Am I going to be able to fire this person if it is the best thing for the business?” Growing something with a friend or family member can be great, but there are going to be bumps in the road, money issues, and things that happen that are simply out of your control. Can your relationship withstand those times, and is it worth it?
A lot of times partners will get into business with each other because they are great friends, have a ton in common, and are very similar to each other. This isn’t always the best thing. The best business partners balance each other out. If one partner is strong in sales, a great situation would be for the other partner to be strong in operations.
Who’s the boss?
In a partnership, someone has to take the lead and the other person has to be ok with that. Even if the business is split 50/50, businesses struggle to operate when there are two people sitting in that CEO seat. There needs to be one person that can make the final decision or judgement call.
Consider the roles of each person in the partnership, what each is bringing to the table, and the chain of command as the business grows. Can you come to decisions together or can someone take a back seat and allow the other partner to drive?