Partnerships have the power to move your business along in positive steps or they have the challenges that can disrupt our lives, destroying friendships, and causing many years of pain. Taking some time to set up the partnership correctly will help avoid many of the challenges.
Here are 4 things to consider when setting up the agreement with your potential partner.
Clearly defined expectations
Each party approaches the partnership with a set of beliefs and expectations of what they will do and what the other party will do. Often these do not line up with each other. The things that you must be defined within the expectations; Responsibilities, Accountability, Finances, Decisions, and Roles within the company.
Who is accountable for what? What will fall within each of the areas of responsibility? Gino Wickman’s book Traction has a great plan on laying out the organizational charts and then assigning accountability to each of the parties involved. The organization structure will help clarify who will run and operate each of the pieces.
Testing the relationship
This may not always be possible in every situation but it is recommended to allow a testing time of 3–6 months to see if you are able to work together on a partnership level. During this time the trust will be able to be established and the responsibilities can be readjusted based on expectations.
There are two specific “escape” or “exit” clauses that could be included. The first would be at the end of the 3–6-month testing phase. The second would be what happens if the partnership must be dissolved due to irreconcilable differences. Putting the exit plan in place before the partnership starts will not only allow you too possibly save the relationship it will or should save you countless dollars in court and lawyer fees. This is not a guarantee but it will set you on a path that will allow you to act honorably while dissolving the partnership.
Analyzing whether you should enter into an agreement is just as important as setting up the agreement correctly. Be sure to do a SWOT analysis while making the decision.
The final process in this decision-making process is to take the time to do a SWOT (Strengths, Weakness, Opportunity, Threats) analysis. By putting this down on paper and visualizing all the possibilities that the partnership could open up, it allows you to more clearly see if this is a good move forward for you and your company. Steps 1–4 will get you started, (Click here to read) while this article will help you get clarity on all the information down in one spot to help clarify your thoughts before making this decision.
Each week I have the honor of meeting and coaching business owners and entrepreneurs, and at least once a month this question of partnerships comes up, due to the fact that we never stop dreaming of new opportunities. The biggest challenge that I see with these owners is that they are not comfortable with making the decision. At least, that is, until they have a system to walk through and a way to give them a little more clarity in their thoughts.
With clarity comes the confidence that you are making the right decision.
The next challenge many of the owners and entrepreneurs face is that once the partnership is created, and it does happen to turn sour, how you get out of it without a good amount of financial and relational fallout? By putting a strategy in place before you step into a partnership, it will give you the ability to manage that minefield of dissolving a partnership without as much damage to your finances as well as your relationships. Refer to this article on Partnership to help clarify your decision: (Click here to read)