Partnership Agreements: Building Strong Partnerships

Partnering can be very good, but it can also cause trouble. Each person in a business brings their own vision for the business, along with their strengths, talents, and assets. As each person works to make the business succeed, they act in a way that sees their own vision for the business fulfilled. At first, those visions may coincide. But over time, their ideas about the business may be quite different. As daily pressures, market changes, and economic activity influence the business, each partner needs to decide how strongly they will pursue their vision.

Will Partner A encourage Partners B and C to specialize their locksmith company in corporate business because he sees a highly profitable future there? Will Partner B encourage Partners A and C to move the locksmith business into one particular area of the city because she sees massive residential growth and no competition? Will Partner C encourage Partners A and B to turn the business into an international franchise because he feels they have a unique, profitable, and replicable model?

In far too many cases, these types of disagreements end the partnership. While each person has the best interests of the business in mind, their idea of "best interest" is different.

That's not to say that you shouldn't partner! Partnering allows you to minimize weaknesses, maximize strengths, and combine assets to improve the chances of success. Two (or more) heads are better than one!

Avoid problems by using these ideas to help you create a strong partnership:

• Make sure you and your partner(s) communicate early and clearly what the future of the business will look like. This should happen before you even form your partnership. Write it down. It's true that the marketplace changes so you will want to include provisions to modify the direction of the business. Or, one way of solving the problem is to give one partner a little more responsibility in the area of direction.
• If you enter a partnership with your friends, tread carefully. Business and money has a funny way of driving a cold, silent distance between friends. If you do decide to partner with a friend, create a clear outline of specific responsibilities for each of you and make sure you both sign the agreement.
• Create buy-out agreements so that each partner can buy out the stake of the other partner(s).

Partnerships are a great way to help a business succeed but with equality in authority, there is an invitation for obstacles. Do what you can to minimize those obstacles and each partner should commit to practicing gracious patience with the other partner(s). Communication is the key to partnership success.