If you’re thinking about entering into a partnership for business, read my first post on the subject here. And then, print out this handy list, grab a cup of tea and your potential partner and start a discussion. Make sure to talk about all the things on this list because how you start with a partnership agreement is more important than how you end. Are you ready? Grab that tea, get cozy and get talking! Your (possible) business partnership depends on your honesty, authenticity and thoughtful answers – both now and in the future.
(1) What products will you actually sell? Just soap? Soaps + lip balms? Soap + lip balms + more? What products do you want to sell? Who do you think your customers will be? Will you sell at craft fairs, home parties, mail order, online, just to retailers or all of the above? Which ones will you tackle first?
(2) Will you be a corporation, an LLC or a sole proprietorship? This affects you and your family should something negative happen in the business, say, a bankruptcy. Though we all go into businesses planning for the best, we also need to come up with a worst-case scenario and planning what type of business entity you’ll be is the first step to that.
(3) How will you fund the business? Who is putting in what money? Who is putting in what time? In 6 months, who will be working what hours? What about vacation time? Do you get vacation time? What happens when one partner gets married and takes 2 weeks for her honeymoon (after basically neglecting the business for the 3 months before the wedding)? Resentfulness is a burning hole that can ruin any partnership and believing that others are not working as hard as you are? That’s prime grounds for feeling resentful.
(4) If you disagree with each other, how will you settle arguments? Mediator? A family friend? Does one partner have 51% and the other 49%? Is everything a collaboration? What level of decisions need to have two people to agree on them?
(5) What will you do with the money you make? Will you pull out your profits or re-invest them? Will you take salaries? Will you be paid hourly based on how many hours you worked?
(6) How can the company be dissolved if things don’t work out? How will you value the company if one partner buys the other partner out? Or, what happens if a partner (gulp) dies or has a major health issue that takes them out of the business?
(7) Let’s get philosophical: what are you life goals? Do you have professional and personal values? What are they? What are the maxims you live by? If your personal maxim is, “The early bird gets the worm!” and your potential partner’s maxim is, “Good things come to those who wait,” there could be a major potential for trouble.
(8) Gut check. Do you trust this person? Note: hopefully you’re really drinking tea and not alcohol because if you’re drinking alcohol, you might want to check in on this question tomorrow.
(9) What is your skillset? What is their skillset? Do they compliment eachother? What about weaknesses?
Talking about your expectations for the partnership and the business is important before diving in. There is big difference between being the best of friends and having to work with each other day in and day out (and sometimes, long into the night). Just like pre-marital counseling, you need pre-partnership counseling. When you work on these things early, you’ll be able to concentrate on building the business – not working out interpersonal kinks.