A business partnership comes with combining strengths and celebrating successes, but it also means late nights and tough compromises. After all, making a hasty decision when it comes to choosing a new partner could spell disaster for your company.
These six entrepreneurs offer advice on how to ensure that you and your partner are aligned on what's most important before you get yourself -- and your company -- in over your head.
Outline how each side adds value.
The cardinal rule of a successful partnership is to be mutually beneficial. And to increase the likelihood of achieving mutual success, Michael Mogill, president of video marketing and production company Crisp Video Group, suggests outlining what each partner will bring to the table first.
"Outline communication, expectations and ultimately how success will be measured. Good partnerships add value both ways," he says.
Review their references.
Before signing a contract with a new partner, Andy Eastes, CEO of warehouse management system SkuVault, consults those who know them best, especially when it comes to their aptitude at work.
"When structuring a new partnership, look to the companies where the partnering party has worked in previous years. Talk to their former bosses and coworkers to see if you can feel out strengths and weaknesses before the pen is on the pad," he says. "Qualities that appear endearing as a friend can be annoying as a partner. Consider their long-term goals to see if they align with those of your company."
Start with a "date" before you commit to a partnership.
"The best way to start is to pick a small assignment and get started," says Dan Golden, president of digital marketing agency Be Found Online. This approach, much like dating before getting married, ensures you get a sense of their work style and how compatible it is with yours.
"Dive into a project or two and make sure it works. If it's a good partnership, it'll all work and you can sort out the details later," he says. "This approach gets you going and saves time. Don't start by drafting a big contract to account for every potential scenario until you know there is chemistry and proven results."
Allocate duties for each area of business.
Going in with an understanding of each partner's responsibilities is imperative -- otherwise, nothing will get done. Sunny Desai, president and CEO of hotel development and investment company Desai Hotel Group, recommends assigning specific duties to each partner up front.
"It is imperative that each partner understands who is responsible for what. Clearing it up on the front end will prevent resentment in the future," he says. "In an early failed business, we made the mistake of thinking that we would all make joint decisions and vote based on ownership percentages. In the end, nothing got accomplished and the business failed."
Decide on equity distribution.
Nicole Munoz, founder and CEO of SEO and marketing company StartRankingNow, recognizes that each person brings different assets to a new partnership -- and when deciding on equity distribution, these assets should be a contributing factor. While it may not be a fun conversation to have now, it will save you from disagreeing later.
"Partners bring different strengths to the table, and it's important to decide on an equity distribution that takes those strengths into consideration," she says. "If you have a partner more involved in the day-to-day operations, while the other partner is involved in high-level strategies, how you distribute the equity should reflect those differences. Set it up at the beginning to avoid arguments later."
Have the hard conversations up front.
"Most partnerships end, whether they fall apart or the business sells," says Jeremy Brandt, founder and CEO of online cash home buyer WeBuyHouses.com. That's why it's important not to shy away from unpleasant conversations about the future -- and the end -- of a burgeoning partnership.
"Answer questions about how each partner would get out, buy the other out, handle a non-performing partner, deal with a death or a divorce, and handle one partner wanting to sell when the other doesn't," he says. "Write it all down in the partnership agreement."