Pal or Partner: Your Starting a Business Partnership Checklist

In theory, business partnerships seem like a great idea. Unfortunately, this isn’t always the case.

70% of business partnerships fail. One of the most common reasons partnerships fail is because friends form a business together.

How do you ensure your partnership thrives, even when starting a business with a friend? Starting a business partnership checklist will decrease your risks and will maximize success.

Is It Worth Forming a Business Partnership With a Friend?

There are many benefits to forming a business with a friend. You two get along, you trust them, and you’re not taking the work all on your own.

However, there are downsides of forming a partnership with a friend. Businesses endure a lot of struggles in the first few years of existence. Many business owners also make mistakes, new and experienced.

What if your friend makes an error? You care about your friend and it can be difficult to hold them accountable. In addition, the stress that comes from business ownership can put a strain on your friendship.

Other Business Partnership Problems

Business owner accountability and stress aren’t the only problems friends face when they run a business together. Here are other common problems.

Clashing Working Styles

The key to partnership success is complementary working styles. Just because you and your friend get along doesn’t mean you two will work well together.

A common problem that partners face is one works harder and puts in more hours than the other. This causes a strain due to stress, unethical distribution of pay, etc.

How You Two Approach Problems and Conflict

Problems and conflicts occur in the business world. How you and your partner handle business conflicts can influence your working relationship.

For example, let’s say a major client isn’t happy with your business and you lose this client. Now, your business is under financial stress.

One partner ignores the financial crisis and focuses on other activities, hoping it will go away or the other partner will solve it. However, the other partner is stressed out and starts harassing the other partner in a hysterical state.

This isn’t the workings of a healthy business partnership. Business partners work together to solve problems and grow their business. If you and your partner won’t work this way, your partnership will fail.

Debt

One business partner may be in debt to another partner.

This usually occurs when one partner borrows money from the other partner to invest in equipment, hire staff, etc.

If the other partner doesn’t pay the other back, or at least a promissory note with an effective promissory note template, their business partnership could fail.

Starting a Business Partnership Checklist

Even with these problems, you can have a successful business partnership. Creating a checklist ensures your business is organized and can conquer all problems. Here are the necessary items to have on your checklist:

  • List your skills (similar and different)
  • Explain why you trust your partner
  • State your goals (individual and combined)
  • Your individual working habits
  • Market awareness
  • Your agreed business plan
  • Decision processes
  • Written partnership agreement
  • Exit strategy

A partnership checklist doesn’t ensure you’ll be successful. But it provides leverage for growth and success.

Start a Successful Business Partnership

You may think starting a business with a friend is smart.

However, you could run into many issues that will affect your business and friendship. Starting a business partnership checklist will ensure you and your partner will collaborate effectively to grow your business.

Need more entrepreneurship advice? Continue reading our blog.

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