Two's Company

This story appears in the March 2006 issue of Entrepreneur. Subscribe »

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.