Updated: Nov 17, 2020
There are plenty of entrepreneurs struggling in 2020. Though it may seem like now is the time to hunker down and try to minimize your losses, periods of chaos like this are actually the best time to grow your business. However, that can be difficult to do when you have a business partner who isn’t pulling his or her weight—or is actively undermining your progress. Do you have the feeling that your business partner really isn’t living up to his or her side of the bargain? Here’s what you can do to improve the situation.
How to Tell When the Partnership Isn’t Working
There are numerous common mistakes that entrepreneurs make when running their business. Some of these occur in the set-up phase and they become even more common (and potentially dangerous) when you’re going into business with someone else. If you haven’t set up your partnership properly, it’s likely the endeavor won’t work out as you envisioned. Here are some signs the partnership is going off the rails:
· You’re doing all the work. Do you show up every Monday at 8 am only to find your partner is on vacation…again? If you’re doing all the work and your partner is splitting the profits, something isn’t right.
· One or both partners are frustrated with the other. When you think about your business partner, your first feeling shouldn’t be that of frustration. When a partnership is working, both members are motivated, inspired, and energized by each other. If frustration is your main emotion, changes need to be made.
· Meetings become arguments. If the majority of the meetings with your partner involve conflict or devolve into arguments, you’re likely not on the same page and your business is suffering as a consequence.
Setting Up a Successful Partnership
Setting up a successful partnership starts with finding the right person. As in so many situations in life, you are who you hang with when it comes to choosing the right business partner. Just because you’re friends with someone or respect them does not mean you’ll work well together. If you’ve chosen the wrong partner, it’s likely that everything you try to do to fix the relationship will fail.
Once you’ve found the right partner, the next step is to put everything into writing. This includes:
The responsibilities of each partner. You need to be very detailed in this part of your agreement. Is work to be split 50/50? If so, how will that work? Is one partner in charge of funding only and the other responsible for day-to-day operation of the business? Agree upon and explicitly state down to the last detail the expectations of both parties.
How profit is handled. Is it a 50/50 split? Does part of it go back into the business? Will there be a profit-sharing plan for employees or management?
How conflict is resolved. What happens if you have very different ideas about a business decision? Do you choose a mediator? Do you take it to your team to vote?
The end game. What happens if one or both partners wants to dissolve the partnership? What will you do with equipment, intellectual property, clients, capital, etc.?
If you’re already in a partnership and have not created an agreement, you can still put one in place. However, if you feel you’ve not chosen the right person to be in business with, it’s usually best to walk away now and find a more suitable person to partner with. Have more questions about partnerships? I’d love to chat about it.