Recently I received a phone call about an opportunity to purchase a turn-key business. After receiving several texts with the pertinent details, I called someone I thought might be interested in buying the business. After a short conversation, it became clear that we both really liked the deal based on what had been disclosed so far, so we discussed the possibility of partnering and sharing the risks involved. A short while later after more had been disclosed, our conversations quickly jumped to percentages and responsibilities.
This scenario is fairly common among entrepreneurs- particularly those that are always on the lookout for their next investment. So, what I want to share with you is what I believe the focus should be whenever you are even thinking about partnering with another individual. The following is a list of considerations for you to ponder before partnering:
1. With or without another individual partnering with me, do I actually like the business opportunity? If the answer to this is no, then perhaps you should keep it moving. I’m not sure that a partner is what you need as much as a different set of business investment options to consider.
2. Why am I interested in partnering on this deal instead of going at it alone? Be clear about what value you offer as well as what value you are looking for a partner to bring to the table. Whether its experience, money, influence, or perhaps a combination of the three, YOU need to be clear about why you want a partner. There’s nothing worse than someone attempting to negotiate without first being clear on what their ideal end result looks like. As one of my older mentors used to say, “Stand for something or you’ll fall for anything”.
3. Is the person I’m thinking about partnering with the RIGHT partner? There is no formula for determining who the right partner may be. What should be high on your list of priorities, however, is trust and reliability. If you can trust this person and you know that they will do what they say they will do, I believe most issues that pop up from time to time can be worked out. If you can’t trust the person, then I think we both know there’s not much to discuss there. And, if your potential partner does not even value their own words by doing what THEY say they are going to do, then this is just a disaster waiting to happen.
4. Assuming you have found the right partner for this opportunity, do you have a partnership agreement in place? I don’t care if the person you are partnering with is your first born child who you KNOW loves you dearly and would happily change your diapers when you’re old and wrinkled. You NEED a partnership agreement! Each person has their own reasons for being interested in this opportunity, which is fine. The way to make sure that a win-win is created, however, is to put in writing such things as:
a). What happens if one of you wants to retire? What happens to your partnership interest?
b). What if someone wants to sell their interest in the partnership? Can they sell it to whomever they want? Must the other partner approve?
c). What if one of you dies? Must the surviving partner now be in business with the family of the deceased (who may or may not be business savvy)? Yikes!
d). How do you go about distributing profits in the partnership? What if one person wants distributions more frequently than the other partner?
There is lots more to consider and include in a partnership agreement, but the above is just a snapshot of what to think about. The bottom line is this: don’t get into partnerships lightly. Sometimes after doing your due diligence, you’ll realize that it’s best to simply walk away because the potential partner just won’t allow you to experience the win-win you were hoping for. Walking away is fine- especially when you shift your mindset from lack to abundance thinking. You’ll realize opportunities are everywhere. There’s no such thing as a “once in a lifetime” opportunity. Commerce exists, and it always will. Claim your piece of the pie, but just be smart about it.