Questions and conversations you need to have with your new business partner
If you’ve landed here it’s likely that you’ve found someone you’d like to go into business with. Having a strong foundation from which you’ll launch and grow your partnership will be essential to achieving your entrepreneurial goals and maintaining a harmonious relationship.
If you’re still in the early stages of getting to know your potential business partner, we recommend checking out our Business Partner Checklist and then returning to this blog post if you feel you’ve found the right person to move forward with.
Once you’ve determined that someone is the right business partner, use the following prompts to guide your foundational discussions and set the partnership up for success.
1. Define your success criteria
What will a successful business partnership look and feel like for you both? How will you track and measure your success over time? What big goals are you hoping to achieve with the business? Remember that success doesn’t just include revenue growth and tangible results. Success can also include having a fulfilling business relationship, incorporating fun into your business model, and feeling like you’re making a positive difference in the world.
2. Talk about worst-case scenarios and prepare for them
Early on in your business partnership, brainstorm a list of potential worst-case scenarios and talk about how you’ll be proactive in mitigating them in addition to how you’ll handle them should they arise. Worst-case scenarios could include partner illness (and even death), bankruptcy, divorce, disability, etc. These conversations are often uncomfortable and difficult to have, but your capacity to communicate the hard stuff will showcase how truly dedicated, honest, and open you both are. It’s also a good idea to speak with a legal professional to make sure you’re fully prepared when the unexpected arises.
3. Decide how much you’ll both invest in / contribute to the business
How much will each of you invest in the business? How much time will you contribute? What other resources, connections, or expertise will you bring? It’s essential to consider how much value each partner brings to the business when determining how the partnership should be structured. For example, will you be 50/50 partners and therefore split the profits in half? Or will you need to structure the partnership differently to reflect your actual contributions?
4. Determine your roles and responsibilities
What are your expectations of each other and what aspects of the business will each of you manage? It’s essential to define your roles and list your areas of responsibility in writing to hold both partners accountable and give your business a solid foundation to grow from. You also want to make a plan for how you’ll address each other if one person falls out of integrity with their commitments to the business.
5. Write a business plan together
Writing and agreeing on a business plan together will help to ensure you’re both on the same page when it comes to all aspects of the business you’re building. If you’re new to the business planning process, we recommend using Bedside Business Plan to guide your thinking. Bedside Business Plan is a guided journal with over 100 questions and prompts to help you build a foundation for lasting success and set your partnership up to thrive.
6. Define your communication parameters
How do you plan to stay connected to each other (e,.g., over email, text, slack, etc) and what are the boundaries around your communication? When will you be available? When will you be unavailable? In the early days, you’ll likely want to talk about everything with each other. Later on, you may decide that you can be more independent in your roles and touchpoints. Establishing a solid plan for connection will help you respect each other’s communication styles while making it easier to keep each other updated on important aspects of the business.
7. Determine how you’ll resolve conflict
When something negative happens or there’s tension in the relationship, you’re going to want to have a process in place for navigating your differences and maintaining respect. As you begin your partnership, take some time to outline various steps you’ll take for navigating and resolving future conflicts that arise. You may even want to talk about potential future conflicts that could arise and make a plan for addressing them. If you want to be proactive in addressing conflict, or you’re currently experiencing conflict with a business partner, check out our comprehensive blog post on How to navigate conflict with a business partner.
8. Create a formal partnership agreement
While it’s tempting to jump into business with someone quickly, having a partnership agreement will ensure core elements of the partnership are documented and you have a strong legal backbone to keep both partners in integrity. Your partnership will likely include details around roles, business goals, equity percentages, profit sharing, contingency plans, exit strategies, etc. A lawyer can help you draft a formal partnership agreement and ensure you have all of the necessary details ironed out and properly documented.
Taking the time to have these foundational conversations with your new business partner will be key to maintaining a thriving and prosperous relationship for years to come. If you’re wanting to learn more about how to create a truly vibrant and healthy relationship with your business partner, check out our tips to maintain a thriving business partnership.