It’s a widely acknowledged fact that before getting hitched, there’s a process couples must first complete. Asking someone out for the first time, dating, getting engaged—these are all important steps that couples take toward the commitment of marriage.
For young professionals starting a business venture, a similar process applies when considering a partnership. Some entrepreneurs prefer to go it alone, while others feel more comfortable sharing a stake in the business—both its successes and its problems.
Just as you would assess the pros and cons of being single versus being in a relationship, entrepreneurs must do the same before entering into a business partnership. A partner can act as a security crutch and can be beneficial if leveraged effectively. If the division of labor and effort is shared on an equitable basis, you might be able to accomplish much more than you could alone. But on the other hand, the obvious advantage of being a sole owner is that you reap 100 percent of the rewards, while holding sole accountability for everything the organization does.
Like any courtship, entering a business partnership is an intricate process. For those who choose to forgo the single life and commit to a business partner, here are several steps one must take into consideration before taking the plunge:
1. Assess compatibility
When formulating a partnership, you must first gauge compatibility. At first glance, the person might seem like an attractive business partner, but it’s important to take the time to really to get to know your potential future partner. Take the opportunity to assess strengths and weaknesses, individual visions and division of labor—the biggest considerations when looking to go into business with someone.
2. Put it in writing
Compromise is an important part of dating and essential to any business partnership. Businesses that struggle most are those with prima donnas or people with personal agendas that don’t match the company’s overall vision. Successful businesses have a winning team mentality with a shared common goal and accountability for each person’s role. For this reason, it’s important to put everything in writing. (You can see a sample partnership agreement here.)
3. Establish a clear vision
Three primary factors hold a partnership together: value, vision and culture. A partnership will only succeed if these factors remain aligned. Otherwise, any disruption or hiccup in the business can topple it. Each partner should write a vision statement prior to entering a partnership and then review each other’s to look for similarities or discrepancies. If there are discrepancies in your visions, chances are the partnership won’t work. If they’re similar, combine them into the company vision. Rewrite it each year to confirm you’re still aligned. If your visions are out of sync, so is your ability to build a solid business together.
4. Work on building trust
Trust is also a huge factor between partners. When all is said and done, if you don’t trust the person you share a business with, you’ll have trouble down the road. Suspicions can come up. Accusations induce feuding and can lead to one trying to rip off the other. Make sure you ask enough questions before you take any steps forward with a potential partner, and if you have any doubts at all, wait until you can work them out.
Don’t make the mistake of rushing into a partnership out of convenience or as an emotional crutch to have someone to share the risk with; it can be devastating if your visions and values are misaligned. A two-headed monster can emerge even years after you begin, and breakups are costly and can kill a business.
Arguing against partnerships, however, is like arguing against getting married. More than half of marriages are said to end in divorce, which can be ugly and expensive. Yet people still get married—and business partnerships are no different. The key to successfully getting hitched in business is making sure you choose the right partner.
Nick Friedman (@NickFriedman1) is co-founder and President of College Hunks Hauling Junk and College Hunks Moving, the largest and fastest growing U.S.-based junk removal and moving franchise opportunity. He is co-author of the Amazon best-selling book Effortless Entrepreneur.