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Five Things to Do Differently When Setting Up a Partnership

January 16, 2018 // R. Shawn McBride

We spend a lot of time working with our clients on partnerships, setting them up, working through issues in them, making them grow. I often speak about partnerships, www.yourbusinessspeaker.com. I have come up with a short list of things that need to be done in the building of the partnership, things that every partner should be doing at a minimum before they start their partnerships.

#1. Whiteboard or be creative. The partners should get together and have a real- life discussion of what the partnership should be. Do some fun stuff, think about dreams. Be creative, and consider who should do what, how it should be done, and how the partnership should grow. This will be key to starting to build partnership agreements and discover how everybody will work together. Everybody needs a shared vision of where the business is going and what it is going to look like.

#2. Discuss expectations. What is each partner expecting? What does each want out of the partnership? Does one want a lifestyle? Does one want growth? How does each want this thing to work?

#3. Divide the money. Ultimately, partnerships are about economics. At some point, the partnership needs to make money to pay the bills of the owners, to allow them to live their lives outside the business. How is the money going to be divided? Talk about this sooner than later.

#4. Divide the responsibility. How is the business going to be done? How are the partners going to take care of each other? Talk about this division sooner than later.

#5. Talk about the four Ds and other issues. We’ve talked about planning for the four Ds:  Death, Disability, Divorce, and Disagreement. These must be planned for in every partnership. What happens if these what-if scenarios occur? How is the business going to grow and continue? What about other issues? Build plans that work and allow the business to continue, regardless of what happens in the future.

What has been your experience in setting up a partnership? What things are you thinking about for future business? What would you do differently now? Let us know in the comments below.

 

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This posting is intended to be a tool to familiarize readers with some of the issues discussed herein.  This is not meant to be a comprehensive discussion and additional details should be discussed with your attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. Each case is unique.  Past results do not guarantee future outcomes. This article should not be treated as legal advice to any person or entity. Freeimages.com/photographer Kimberly Vohsen.

 

About the Author

R. Shawn McBride is the Chief Innovation Officer at McBride For Business, LLC. His signature keynote, The 3 Laws of Empowerment, gives audiences an entertaining look at how they can prepare, plan and protect themselves. You can email R. Shawn McBride or (214) 418-0258.

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