You’ve found the perfect business partner to complement your skills and share the workload. Now comes the big question: How do you set up your new venture for success?
Forming a partnership brings tremendous opportunities if done right. But without careful planning, a lack of alignment on expectations can also spell disaster. Studies show over 60% of all partnerships fail due to preventable issues like inadequate planning, poor communication, or unresolved conflicts.
Don’t let your promising business idea get derailed. By following this comprehensive 20-step checklist, you can build a foundation for a thriving, sustainable company with your partner:
Identify All Partners
Document full legal names, contact information, roles, and ownership stake for every partner. This ensures all parties clearly understand who is involved from the outset.
Define Your Business Purpose
Detail the primary mission, offerings, target customers, and activities of your joint venture. This aligns everyone on the central goal.
Specify Contributions by Each Partner Quantify any financial assets, physical assets, expertise, intellectual property, or sweat equity that each partner brings to the table. This values everyone’s input.
Distribute Profits and Losses Decide percentages for distributing net profits or losses to partners. This should align with ownership stakes and contributions.
Assign Roles and Responsibilities
Divide key functions like operations, marketing, product development, etc. based on each partner’s strengths. This optimizes talent.
Establish Decision-Making Processes Agree on procedures for making major business decisions, like requiring majority partner votes. This facilitates alignment.
Address Ownership of Assets
State that owns tangible assets like real estate, inventory, equipment, IP, etc. And specify transfer procedures if a partner departs.
Select Dispute Resolution Approaches Choose mediation, arbitration, or another method to resolve internal conflicts efficiently, before they intensify.
Outline Terms to Dissolve the Partnership Define conditions that trigger dissolving the partnership, like a partner’s exit or bankruptcy.
Plan for Withdrawal of a Partner
Clarify the next steps and settlement terms if a partner departs, including payout timelines and non-compete clauses.
Prepare for Death of a Partner Decide the course of action for the partnership if a partner passes away, like transfer of shares or dissolution.
Sign and Notarize the Agreement Partners must sign partnership agreements in front of a notary public to make them legally enforceable.
Manage Risks Brainstorm potential pitfalls, from interpersonal conflicts to cash flow issues, then create mitigation plans.
Set Clear Expectations Have an open conversation about all aspects of the partnership relationship and put terms in writing.
Choose an Ideal Structure Assess options like General Partnerships, Limited Partnerships, LLCs, etc. based on liability and management preferences.
Officially Register Your Partnership File formal registration documents and obtain the necessary licenses and permits to legally operate.
Create a Partnership Agreement This comprehensive contract should codify terms for ownership, duties, finances, conflict resolution, confidentiality, dissolution, and more based on your discussions.
Embrace Agile Management Be ready to nimbly pivot plans if circumstances change to capitalize on new opportunities.
Refine Decision-Making Processes
Ensure chosen actions motivate all partners through inclusion in planning and clear communication.
Execute Flawlessly Once decided, vigorously pursue key priorities promptly for optimal impact.
Finally, develop a clear exit strategy for departing partners in your agreement for smoother transitions later.
The success of a partnership hinges on thorough planning, trusting relationships, and mutual commitment to excellence. While it takes effort upfront, embracing this checklist allows you to reap the immense rewards of combining complementary talents with allies who share your vision.
When cultivated consciously, business partnerships can be incredibly fulfilling and profitable. So formalize terms, clarify expectations, and align on goals with your partner from day one. If you tackle these steps methodically together, your joint endeavor will keep growing and thriving for years to come.