I recently met with three other business owners to discuss best practices in partnerships. We could have simply read a book on the subject (such as The Partnership Charter by David Gage), but the primary focus of the meeting was on the situation of one of the participants. He was thinking about bringing a partner into the business he founded seven years ago. The other two participants had partnership experience.
We came up with a short list of imperatives for successfully bringing a partner into an ongoing business.
- Discuss each partner’s vision for the business, and make sure those visions are compatible.
- In addition to reviewing the current business plan and related financial projections, be sure to agree on what will happen if the worst case scenario materializes.
- Begin the relationship as employer/employee, with a clear path for the employee to earn or buy an ownership stake in the business.
We recognized that there are many other aspects of a partnership that need to be covered in the legally binding partnership agreement. But we concluded that the above three concepts were absolutely critical to the long-term success of a partnership created after the founding of a business.