1. Sharing capital instead of expenses
2. Partnering with someone because you can’t afford to hire
3. Lacking a written and signed partnership agreement
4. Overlooking a limited partnership
5. Lacking an out or an exit strategy
6. Expecting the friendship to outlast the breakup of the partnership
7. Having a 50/50 partnership
Why would you want to avoid those 7 partnership killers?
Sharing your expenses can make it easier to just walk away if an issue occurred between the partnerships. However, sharing your capital will not be as easy when it comes to walking away.
Partnering with someone just because you can’t afford to hire may cause extreme issues. What if you and your partner decide to work against each other, then tension will form because the employees wouldn’t know who to take instructions from.
Always have a legal and formal written agreement that is handled by an unbiased attorney. Make sure to keep the business card of that attorney just in case issues occurred down the road.
Make sure each partner knows what they are liable for and make sure to have a legal and formal written agreement for this as well. Having an attorney to handle this matter would be wise too.
Remember to have an exit strategy. While doing research I came across the perfect terms for this situation. Prenuptial agreement which is what most people get before getting married. Make sure to have a written agreement that discusses who will get what and how the partnership will come to an end.
Expecting to remain friends with your partner after the business ends? The best thing to do is to lose that expectation. Things may get ugly during the “break-up.”
Don’t go into the partnership 50/50. Someone needs a little more control than the other partner. It is best to go into the partnership 60/40 or 70/30. This gives you a “point person for accountability and overall operational control.”
All partnerships do not always come to an end. Forming a partnership with another entrepreneur could be beneficial too. Here are 7 advantages of forming a partnership with another entrepreneur.
1. Twice as much manpower
2. Diversity in skills
3. Different Perspectives
4. Someone to hold you accountable
5. Someone to evaluate ideas
6. Networking opportunities
7. Ability to keep things in perspective
Ever partnership has good and bad moments throughout the relationship. Many partnerships fail and many also succeed. The strongest qualities of a true entrepreneur is the fact that they take risk and they do not give up. If one partnership fails then you will learn from it and can move on to the next partnership. Life is all about taking risk, making changes and learning.