At some point in your solopreneur life, you will confront this question: should I enter into a business partnership?
If you are thinking about ditching your solo business to become part of a duet, I urge you to answer the questions in this article with brutal honestly. Answering these questions could be worth thousands of dollars to you and your prospective business partner.
I was in one partnership and believe me, the early stages can be like a romance—you are lost in admiration of your partner’s abilities and you fail to see or don’t even want to consider potential problems.
So take all the time that’s needed to work through the questions and to consider the ramifications of your answers. This exercise demands complete focus and effort, with no distractions. I recommend that you go away for a mini retreat to get this done.
Initial Partnership Considerations
Does 1+1=3? Or does 1+1=1.5? In other words, are your skills complementary and do they complete the whole, or are you doubling up on each other’s abilities? For example, if you’re both introverted types, then who’s going to bring in the business, meet with clients, and be the face of the company?
Visualize: it’s five years from now, and the partnership has been a great success. What does your business look like? What does the office look like? How many clients/customers do we have? How much money are you taking home? (If your prospective partner envisions success as a two-person boutique and you see success as 100+ employees and millions in annual revenue, then you have a major issue to discuss.)
What are your attitudes toward money? How important is money to you and your prospective partner?
How well does each of you understand finance, budgeting, and accounting?
What do you think you should do with profit—reinvest it into the business or put the money in your pockets?
How will you split the profits and the losses? Is it 50/50?
What will you do with your existing business? Let’s say one of you has $25,000 in existing annual business and the other has $100,000. What does that mean for the formation of the partnership? Consider what’s fair for each of you individually versus what’s best for the new business—they might be two very different things.
What are your current financial situations? Are they similar or quite different? How long could each of you go without taking a salary or draw? (If one of you is loaded and the other is sitting on a mountain of debt, then you have a HUGE potential problem that needs to be worked out.)
Complete the Myers-Briggs or an equivalent, and understand what the results mean.
How big are your egos?
How hard does each of you work?
Are you competitive? Will you compete with each other? Is that a good or a bad thing?
What are your outside interests, and do you think it is important to have similar interests?
Do you want to do a lot of things together outside of work, or do you want to go separate ways when not working?
What do you think of your prospective partner’s personality? Are your personalities compatible?
How will you resolve arguments? Rock, paper, scissors? A game of H-O-R-S-E?
Doing the Work
What kind of projects do you want to land? Do you want big, risky jobs with the opportunity for a big payoff down the line, safer work that pays the bills or a combination?
Who will do which menial task? Say that a piece of work comes in the door that includes a menial task that one of you has to own. How do you decide who takes it?
How do you want to work together? Do you want separate offices or do you want to share an office?
When do you work best? What if one of you is an early bird and the other is a night owl? What ramifications does it have?
How does each of you regard deadlines? (If one of you thinks deadlines are a big deal and the other one doesn’t, then you have a problem.)
How productive, prolific is each of you? Are you slow or fast at getting the work done?
Does your prospective partner have a significant other? What influence will that person have on the partnership?
How well do you know each other? Have you shared your medical histories? Does one of you have any health issues?
How long do you want the partnership to last — “until death do us part,” or something less than that?
How would you break up the business?