Once you have an acceptable partner or partners, it's time to make it official. Have everyone go through some of the same exercises, listing what each will contribute and what each wants from the business. Focus especially on the overall vision for the business-how much growth, how fast, what markets and so on. Then share the lists frankly with your future partners. "Partners get off track fast when they haven't had very thorough discussions in the beginning and have left some ambiguity," says Gage.
Next, Gage advises drawing up more lists, this time of possible situations that the partnership might face along the way. "We suggest that partners individually come up with as many hypothetical scenarios as they can-from the very best scenarios of being inundated with money and orders to the very worst, like not having enough money to pay the bills," he says. "Then create guidelines as a group for how you'll handle those."
Only after you've done that should you begin to draft documents clarifying the partnership's goals, methods, structure and, especially, says Clifford, its conclusion. "All partnerships end, by definition," he notes. "So you need to figure out how you're going to end." This will probably involve an attorney's help to draw up buy-sell agreements describing how the interest of a partner who leaves the business will be bought out by the remaining partners. An insurance broker can help with insurance to finance a buy-sell agreement in the event of a partner's death. If the partners face fundamental obstacles to agreement, Gage suggests bringing in a professional mediator to help find a fair solution.
Don't rely too much on the professionals, however. Gage says too many partners assume all they need to do is draft legal documents describing their partnership. "The legal documents are very narrowly crafted to protect partners from one another," he says, "not to create a successful and effective team of partners."
Keeping Your Partnership Healthy
No matter how much care you take in preparing to go into business together, you have to pay attention after the business gets underway if you want your partnership to stay healthy. Problems can happen soon after starting. But before getting into serious danger, most troubled partnerships show signs that something is going wrong.
Often, one partner begins to seem less interested in and committed to the business than he or she was in the beginning, according to Gage. Signs include skipping meetings, working less, and generally showing less involvement in company affairs. If your partner voices-or you feel-emotions of unfairness about working hours, contributions, salaries or other partnership matters, that's another warning sign.
Difficulties can be posed by external events as well. For example, a downturn in business is a frequent stumbling block. Tough decisions about cutting costs, laying off employees, and foregoing personal perquisites test the strength of many partnership bonds, Kiesner says. "It's lovely when things are going well," he says. "But nothing stays good forever."
Making Your Partnership Better
Even healthy partnerships can benefit from preventative maintenance. Efforts to keep partnerships in good shape should start with communication. Communication is, in fact, the nearest thing to a cure-all for imperiled partnerships. Not just any communication will do, however. It's critical to express your concerns honestly and, if possible, immediately. Covering up concerns leads to festering resentment, says Grossman.
"If one of us says something at a meeting and the other one has a problem with it, after the meeting, we'll sit down and talk about it," Grossman says of her current partner. "We try to be direct with each other. We air how we feel immediately, and we're both willing to make changes. We don't let things build up."
Don't neglect nonbusiness communication, adds Clifford. In a former partnership with several attorneys, they learned that when the going got tough, it was time to schedule a lunch outside the office. But they avoided discussing business over the meal. "By the end of the meal, we'd realize we liked these people and that's why we went into business with them," he says.
It's important to remember that, although partners can be problems, they can also be solutions. Olson, for instance, has no trouble remembering why and how his partners helped him start and grow his business. "I didn't have to worry about finances, because Dave had that covered," he says. "My job was to get the product out; his job was to sell it and account for it. Guy's job was to automate in-house and get our Web site up for e-commerce. Getting together like that allowed us to do what we do best and leverage our skills."
That's why partnerships, formal and informal, are still so popular. If you decide a partnership is for you, and you pick your partner wisely, starting a business with someone can be one of the best ways to go. And if it succeeds, it's successful for both of you.
Mark Henricks writes on business and technology for leading publications and is author of Not Just a Living.