While many entrepreneurial attorneys have no desire to share the captain’s seat, sometimes my clients start tossing around the idea of partnerships. Usually, something happens to prompt the discussion — such as having a longtime associate begin seeking a partnership or mulling the idea of diversifying into another business.
As with any business situation, the more people involved, the messier it gets, and sometimes these missteps require years of cleaning up. I have witnessed lifelong personal and family relationships destroyed. Partnership decisions should NOT be taken lightly, especially those that involve friends or family.
If you are going to enter into a partnership, above all else there are two initial categories to consider.
- Should you?
- Why take this person as a partner?
Before you even go down the path of partnership, ask yourself, Why am I doing this? Are you being pressured by your own desire to grow and you feel partnership is the only way? Is that because there are other pieces of your business which are broken and if fixed would solve a myriad of problems, thus eliminating your desire for partnership?
I suggest that before jumping into a partnership you ask yourself, “What is the good reason for making this business decision” and demand a truthful answer. Then hire a consultant to work through this with you. The fee you pay for consulting will be a drop in the bucket as compared to the cost of a failed partnership.
Assuming, after you ask and answer the question above, you still want a partner, please, do yourself a favor and determine why you are selecting this person as a partner. Partnerships are very much like a marriage and unfortunately, like marriage these days, they tend to fail more than they succeed. If you’re choosing a partner based solely on family ties or lifelong friendship, please reconsider.
Does he or she match your leadership style or perhaps bring strengths opposite of yours in a way that will compliment your style? What does your prospective partner bring to the table besides your current relationship? Does he/she have a skill set that will benefit the organization? How about assets such as cash, property or existing client lists? What empty hole of experience in the same industry can be filled by this person’s presence?
If you are mulling a partnership, a slow, careful review of many details must be conducted first. Get help from a consultant, answer your questions truthfully and fully and be prepared to list every possible scenario that could go wrong before taking the leap.