According to Inc. Magazine, over 80% of partnerships fail. You might ask, why that may be? When you step back and think about it, realistically, how many people can survive the changes that happen during a lifetime? A partner may get a divorce, a partner may have a family need to move to another location, a partner may get sick, a partner may die, a partner may have different financial objectives that change as they mature. Craig discusses the pros and cons you should consider before jumping into a partnership.
1. Create a partnership by meeting often and doing activities outside of business to create a relationship that is founded on a personal relationship that allows you to communicate openly and directly.
2. When choosing a legal entity, it's not good enough to fill out some minor required forms by the state. You need to spend time looking at an LLC, an operating agreement or in a partnership, the partnership agreement and spell out the roles, the responsibilities and what is going to be contributed and how profits will be distributed.
3. Documenting what you agree to with your partner is of utmost importance. One partner may interpret something one way and the other another way. This will allow your partnership to be more successful if terms are properly documented.
4. Take the time to step back and look at what you and your potential partner are going to contribute and what value that might be before moving forward.