How do you know if you should be engaging in a partnership? How do you determine if what you are doing makes sense? Discussions about partnerships can take a lot of time, and a partnership agreement means a large commitment of time, money, and energy. Indeed, it can even be a dangerous economic enterprise. What tells you whether you should be in or out?
Here is a quick, two-part test you can use to analyze whether your partnership discussions even make sense to go forward.
#1. Is there unity of vision and values? Do you and your partner see the future in the same way? Do you want to grow the same business? Do you want to do the same things? Do you have the same values, the same work ethics, the same priorities in life? If your visions are wildly different, or your values are different, you are going to start having feuds within your partnership, which will create a lot of difficulties. Deal with these things before they start. The time to nip these things is sooner than later.
#2. Is there a difference in your skills and roles? While you are unified in your values, be diverse in the roles you take and the skills you utilize. This will allow you to do more than you could individually. You can play off each other and help each other. Having the same roles and the same skills may not create as much economic value and may even create an overlap. When the partners are unified in their vision and their values, but they do different things and help each other, more is going to be accomplished, and the partnership is going to do better. Things will move forward.
Of course, there is more to consider about partnerships, including planning for things like death, disability, divorce, disagreement, and making sure that the partnership agreement really works, but taking the two-part test discussed above is a great start. If you have those things working, you are ready to begin, and you can know that it is worth taking to the next level to see if there is more synergy there.
What have been your thoughts on negotiating partnerships? Have you had challenges in the past? Join us in the comments below and let us know.
Each case is unique. Past results do not guarantee future outcomes. This posting is intended to be a tool to familiarize readers with some of the issues discussed herein. This is not meant to be a comprehensive discussion and additional details should be discussed with your attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. Each case is unique. Past results do not guarantee future outcomes. This article should not be treated as legal advice to any person or entity. FreeImages.com/photographer Stu Stock.
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