This story appears in the
March 2006 issue of
Entrepreneur.
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Business partnerships can be complicated, just like romantic
ones. The sins (and debts) of one partner can afflict the other,
and even the tightest contract won't protect you from an
incompetent colleague. So before you start negotiating any
partnership, take these three key steps.
1. Double-check your decision to take on a partner. Be
straight with yourself. Are you looking for expertise, money,
contacts or just someone to compensate for your weaknesses? Make
sure your prospective partner is really bringing something to the
party.
2. Consider restructuring your relationship. Perhaps a
full equity partnership is not appropriate. Maybe you just need a
lender, a supplier, an employee, an agent or some other type of
alliance.
3. Check out a prospective partner thoroughly. Even good
friends may not act that way in business. Talk details. Check
references. A professional background check of your prospective
partner's public record is never a bad idea. After all, the
best time to find out whether your partner is a crook or a kook is
early on.
When you actually cut a deal, there are certain issues every
partnership should negotiate--most notably, the partners'
respective obligations, how they will split profits, how they will
exercise authority and how they will deal with a change of
membership.
A speaker and attorney in Los Angeles, Marc
Diener is author of Deal Power.
