Tuesday, March 17, 2009

Bill Bartmann Tips: Business Partnerships

Is a partnership right for you? Creating a partnership for business can be a very good or a very bad decision. It is important that you understand how to form a partnership and how to avoid partnership problems before they destroy your business.

If you are considering an opportunity to enter into a partnership, then you must realize that a partner will offer something of value to your business. Also know that a conflict with a partner can seriously impact your business.

A business partnership is like a marriage; you cannot just fire your partner, as you can an employee. Your partner has an ownership interest in your business. Severing a partnership is a legal action, like divorce, and it can be very expensive, even leading to bankruptcy.

You must make this decision wisely; be sure that you are entering into the partnership for the right reasons. A friend or family member does not make one a good choice for a business partner. They must bring something of value that you need to run the business, whether it be money, knowledge & skills in a specific area, or attributes essential to your success.

Another key rule to entering into a partnership is to never go into a 50/50 partnership. Someone has to be in charge. If there should be a disagreement on a business decision, where the authority is 50/50, you will have come to an impasse where you will experience in-action.

It is fine to agree to a 50/50 revenue split, but one side of the partnership must be at least 51% managerial. This must be decided on upfront and understood that one of you will make final decisions. The one who has the 51% managerial position will promise to ask, seek council and respect the opinion of their partner before making the final decision.

Another important document that needs to be included in your partnership agreement is a Buy/Sell Agreement with a separation clause describing how one will buy the other out if one should want to leave the partnership for any reason. Whether it be due to disagreement or just because one is moving on to do pursue something different, it is very important to have a separation agreement in place ahead of time.

A business partnership has a greater chance of being successful if it is properly set up with a complete partnership agreement in place. The agreement must delegate who is in charge, the economics of the business, and the separation clause.

Some of the biggest businesses today began as partnerships; partnerships can be successful. But, be careful and make good choices at the beginning. A partner must bring value to the business and you must enter the partnership for the right reasons.


  1. Great advice for people considering entering into a business partnership

  2. Good advice to go through before entering into a partnership business