The most important thing your partnership needs is a partnership agreement. The partners that I coach in my business all had good intentions when they entered the partnership, and because they trusted and liked each other, many sealed the deal with a handshake. Unfortunately, that is not a great idea. It’s not even a matter of being untrustworthy, but rather coming to a clear understanding that is in writing. People mean different things even using the same words. Once it is written it should be revisited at least once a year and can be revised if it no longer is serving you. But at least it eliminates an “I said, you said scenario” which happens with the best of intentions.
As I have told you before, the alarming statistic is that 70% of business partnerships fail. My mission is to save more and more business partnerships each year. Part of achieving that mission is encouraging you to create an agreement with your partner before you move one step further in the business.
A partnership agreement allows you to structure your relationship with your partner for the long haul. You and your partner can establish amount of profits (and losses) each of you will take, the management responsibilities of each partner, the financial responsibilities, what will happen in the event someone leaves the business, and other important issues. While I hope you never have to take the agreement to court, it is a great tool to use as you live your business, from the beginning to the exit strategies.
Below, find my 6 must-haves for your business partnership agreement.
1. Financial contributions by the partners.
These should include the amount of equity invested by each partner, how profits and loss will be shared and the pay and compensation of eachpartner.It's critical that you and your partner work out and record who's going to contribute cash, assets, or professional services to the business before it opens. Outline these things very specifically. Disagreements over contributions and compensation have doomed many promising businesses.
2. Restrictions of authority and expenditures.
Without an agreement that outlines the authority of each partner, any partner can bind the partnership (for example - signing a contract with a vendor or incurring a debt for new equipment) without the consent of other partners. Decide how decisions about expenditures will be made and how they will be authorized.
3. Duties and responsibilities.
You would be wise to outline these duties in advance - think of it as writing a job description. Who is in charge of accounting? Who is in charge of hiring employees and negotiating salaries? Who is in charge of vendor management? Go through the day to day operational needs, and make sure everything is covered. Make sure to utilize each other's strengths.
4. Provisions for admitting new partners.
My hope is that your business grows and grows, so you may want to eventually bring in new partners. Agree now on a process for bringing in new partners.
5. Dispute settlement strategy.
It is vital to have a plan of resolution in the case of a stalemate between you. Some options used by others are a 49/51 split in the different areas of expertise, for example the one who is most responsible for this area of your business decides. Or you may call in an expert in the field, if not actually to decide, at least to advise. A coach or mediator might by used. You can even decide to flip a coin, but make sure whatever you decide is written in your agreement. You can always change it, but have something there that you discussed and decided.
6. Have an exit strategy.
An exit strategy should include settlement due to personal injury or death. How assets will be distributed upon dissolution. What if one of you wants to retire and retain ownership or on the other hand be bought out? How is ownership retained by the remaining partner? Discuss every possible What IF Scenario that you can think of.
Please let me know if you have any questions that I can answer for you!
PS - Is there anything that you had in your partnership agreement that you believe was either beneficial or harmful to your success? Let me know and I will share it with my readers.
Best wishes,
Dr. Dorene Lehavi
PS You have made a serious investment, both financially and emotionally to create this business. Do everything you can to make it a success. Use my Blueprint Package’s What If Scenario Handbook to help you create a dynamite partnership agreement unique only to you. See the whole package at www.businesspartnershipsolutions.com.
Monday, March 22, 2010
Monday, March 15, 2010
The Importance of a Partnership Agreement
For many people entering into a business partnership, the only agreement they have between them is a handshake and good intentions. They are too busy creating a business plan and brainstorming about the future of their venture to care very much about what might happen to their business relationship in the future. Others are a little more forward thinking and find themselves a generic, legal sounding partnership contract online and print that out and sign it.
The one thing that many new business partners overlook is the importance of discussion and real honest communication before the partnership is officially forged and the necessity of creating a partnership agreement that is tailored specifically to their company and addresses all the issues it needs to.
Creating such an agreement calls for both partners to ask themselves, and each other, a series of rather searching questions and then answer them honestly. What would happen in the future should one partner wish to sell the business? Who is actually responsible for what? How will disputes that arise be mediated?
They should also take the time to examine their differences in values, ethics and personality and how those things could affect the success of the partnership in the future. Of the 70% of business partnerships that are born to fail many of them do so due to differences in opinion and unresolved conflicts rather than an actual problem with the business itself. When drawing up a partnership agreement remember that although you cannot predict the future, you can try to ensure that you plan for the unexpected as completely as you possibly can.
The one thing that many new business partners overlook is the importance of discussion and real honest communication before the partnership is officially forged and the necessity of creating a partnership agreement that is tailored specifically to their company and addresses all the issues it needs to.
Creating such an agreement calls for both partners to ask themselves, and each other, a series of rather searching questions and then answer them honestly. What would happen in the future should one partner wish to sell the business? Who is actually responsible for what? How will disputes that arise be mediated?
They should also take the time to examine their differences in values, ethics and personality and how those things could affect the success of the partnership in the future. Of the 70% of business partnerships that are born to fail many of them do so due to differences in opinion and unresolved conflicts rather than an actual problem with the business itself. When drawing up a partnership agreement remember that although you cannot predict the future, you can try to ensure that you plan for the unexpected as completely as you possibly can.
Friday, March 12, 2010
Collage and the Art of Teambuilding
Every hiring manager, every human resources specialist and in fact every boss will wax lyrical these days about the importance of teamwork in the workplace. Every resume that crosses their desks probably includes a line or two about how well the candidate works within a team as well. But it takes a great deal of work to build a truly successful business team and in many cases it is talked about more than it is actually worked on.
A lack of teamwork – or worse still a team that cannot come together – can sink any business venture, no matter the niche. For instance there may be a great deal of enthusiasm and creativity within a team that could propel the business to a whole new level, but a lack of trust between team members or an inability to communicate with one another effectively means that those brilliant ideas may never see the light of day, let alone be acted upon.
There are hundreds of books, workshops and training courses available on the subject of team building the workplace many of them offering the same advice. In order to make a team really work sometimes though it pays to think outside the box a little and engage the team in an activity, or activities that while they may not seem business related on the surface actually can bring a team together more successfully than anything else.
The art of collage has been around since paper was first invented in China somewhere around 200BC. Cultures from all eras and across the globe have used the technique to express their artistic visions and believe it or not creating a collage can be an exercise in team building that works wonders.
Why does it work? Every team member has a role and can participate. The personal choices that each individual makes as the work is created can reveal much more about their individual thought processes and feelings than a weekly board room meeting ever could and once the collage is finished it also serves as a lasting physical reminder of what the team can achieve when they pool their creative resources.
A lack of teamwork – or worse still a team that cannot come together – can sink any business venture, no matter the niche. For instance there may be a great deal of enthusiasm and creativity within a team that could propel the business to a whole new level, but a lack of trust between team members or an inability to communicate with one another effectively means that those brilliant ideas may never see the light of day, let alone be acted upon.
There are hundreds of books, workshops and training courses available on the subject of team building the workplace many of them offering the same advice. In order to make a team really work sometimes though it pays to think outside the box a little and engage the team in an activity, or activities that while they may not seem business related on the surface actually can bring a team together more successfully than anything else.
The art of collage has been around since paper was first invented in China somewhere around 200BC. Cultures from all eras and across the globe have used the technique to express their artistic visions and believe it or not creating a collage can be an exercise in team building that works wonders.
Why does it work? Every team member has a role and can participate. The personal choices that each individual makes as the work is created can reveal much more about their individual thought processes and feelings than a weekly board room meeting ever could and once the collage is finished it also serves as a lasting physical reminder of what the team can achieve when they pool their creative resources.
Wednesday, March 10, 2010
Partnership Pitfalls
Imagine this scenario: Two Ivy League college friends barely in their twenties create a website that lights up first their own institution and later the world. They have little in the way of formal business training, just a killer idea and a great deal of drive and vision. One of them goes on to become one of the biggest names in the social media revolution but the other literally has to sue to even be recognized as a cofounder and still receives little in the way of recognition for his contributions.
This is actually a real story- that of the men who created Facebook, the social network that has changed the way people of all ages and from all walks of life communicate. Mark Zuckerberg is the man who is always credited with being the “face behind Facebook” however he had partners in the venture, but bickering and infighting led to one of them – Eduardo Saverin – being frozen out.
According to popular lore the two have finally made a truce and Saverin now officially listed as a founder of the social networking giant. Another rumor is that Mr Zuckerberg had no choice but to make nice with his former friend because Mr Saverin was considering cooperating with a director intending to produce an unflattering movie about the early years of Facebook.
The lesson here is that business partnerships of any kind have to be planned and thought out right from the start. By all accounts in 2004 Mark and Eduardo were the best of friends and as such I am sure that they thought there would never be the kinds of problems between them that occurred, just as it is unlikely that either of them could have imagined how huge their venture would become. They allowed their differences to become public knowledge instead of trying to solve them amicably and the dispute will always be a blight on the company’s history, however successful it may be.
Partnering is powerful because the whole is worth more than the sum of the parts. However, it can also cause problems. Planning and communication may be the solutions.
This is actually a real story- that of the men who created Facebook, the social network that has changed the way people of all ages and from all walks of life communicate. Mark Zuckerberg is the man who is always credited with being the “face behind Facebook” however he had partners in the venture, but bickering and infighting led to one of them – Eduardo Saverin – being frozen out.
According to popular lore the two have finally made a truce and Saverin now officially listed as a founder of the social networking giant. Another rumor is that Mr Zuckerberg had no choice but to make nice with his former friend because Mr Saverin was considering cooperating with a director intending to produce an unflattering movie about the early years of Facebook.
The lesson here is that business partnerships of any kind have to be planned and thought out right from the start. By all accounts in 2004 Mark and Eduardo were the best of friends and as such I am sure that they thought there would never be the kinds of problems between them that occurred, just as it is unlikely that either of them could have imagined how huge their venture would become. They allowed their differences to become public knowledge instead of trying to solve them amicably and the dispute will always be a blight on the company’s history, however successful it may be.
Partnering is powerful because the whole is worth more than the sum of the parts. However, it can also cause problems. Planning and communication may be the solutions.
Sunday, March 7, 2010
My Mission to Save Business Partnerships Everywhere – By First, Asking the Right Questions
70% of all partnerships fail, usually ending in miserable and very costly emotional and financial conflict.
In my 25 years of experience, I have found that the issues facing business partners each day are not unique, but the individuals who make up the partnership are. Smart partners get the guidance they need before getting too deep into the relationship and business.
If you simply honestly and candidly ask and answer these questions at the start of your business partnership – or later on if you skipped them – you can save yourself from a miserable and costly end.
1.What part do I want this business to play in my life?
2.Why do/did I want a partner?
3.Do I trust and respect my partner?
4.Have we written a business plan including detailed job descriptions for each of us?
5.Have we talked about every possible What IF Scenario* www.businesspartnershipsolutions.com and addressed them into a partnership agreement based on both our business and personal visions and intents?
6.Have we discussed, written and signed an exit strategy that includes every scenario we can envision?
7.Do we show up without fail for a meeting once a week at least?
Here are some tools to help you to fill in the gaps and ensure the success of your business partnership relationship.
1. If you are considering a partnership or would like to go back and do some of the thoughtful work you skipped before becoming partners get the 15 very important questions to ask yourself and your partner for only $14.95.
www.coachingforyournextlevel.com .... click on business partners in the left menu.
2. F*REE GIFTS FOR BUSINESS PARTNERS. Are you considering one or are you in one already? Take my FREE Business Partnership Assessment and receive 3 FREE bonus interviews (mp3s) from my Successful Partnership Series. Find out from others what they do to ensure their success. Immediate download. http://www.businesspartnershipsuccess.com/
3. Invest in yourselves by purchasing the Blueprint package including the “What If” Scenarios, the 7C's Danger Signs to Avoid and other bonuses. See the description at www.businesspartnershipsolutions.com. At an introductory price of $497 you will get a very worthwhile return on this small investment.
4. If you have had an ongoing successful partnership schedule a one session Annual Tune Up with me to identify blind spots and nip any problems in the bud.
5. If you are a business coach to entrepreneurs who may be in a partnership or considering one, you can use these tools in your coaching to ensure that the pitfalls in the partnership relationship do not sabotage the business. Become an affiliate and provide your clients with the Blueprint package to use with your coaching.
Watch for more tools. You have made a serious investment, both financially and emotionally to create this business. Do everything you can to make sure it succeeds.
Feel free to email your comments and questions to me.
My best wishes for your success,
Dorene
info@businesspartnershipsolutions.com
In my 25 years of experience, I have found that the issues facing business partners each day are not unique, but the individuals who make up the partnership are. Smart partners get the guidance they need before getting too deep into the relationship and business.
If you simply honestly and candidly ask and answer these questions at the start of your business partnership – or later on if you skipped them – you can save yourself from a miserable and costly end.
1.What part do I want this business to play in my life?
2.Why do/did I want a partner?
3.Do I trust and respect my partner?
4.Have we written a business plan including detailed job descriptions for each of us?
5.Have we talked about every possible What IF Scenario* www.businesspartnershipsolutions.com and addressed them into a partnership agreement based on both our business and personal visions and intents?
6.Have we discussed, written and signed an exit strategy that includes every scenario we can envision?
7.Do we show up without fail for a meeting once a week at least?
Here are some tools to help you to fill in the gaps and ensure the success of your business partnership relationship.
1. If you are considering a partnership or would like to go back and do some of the thoughtful work you skipped before becoming partners get the 15 very important questions to ask yourself and your partner for only $14.95.
www.coachingforyournextlevel.com .... click on business partners in the left menu.
2. F*REE GIFTS FOR BUSINESS PARTNERS. Are you considering one or are you in one already? Take my FREE Business Partnership Assessment and receive 3 FREE bonus interviews (mp3s) from my Successful Partnership Series. Find out from others what they do to ensure their success. Immediate download. http://www.businesspartnershipsuccess.com/
3. Invest in yourselves by purchasing the Blueprint package including the “What If” Scenarios, the 7C's Danger Signs to Avoid and other bonuses. See the description at www.businesspartnershipsolutions.com. At an introductory price of $497 you will get a very worthwhile return on this small investment.
4. If you have had an ongoing successful partnership schedule a one session Annual Tune Up with me to identify blind spots and nip any problems in the bud.
5. If you are a business coach to entrepreneurs who may be in a partnership or considering one, you can use these tools in your coaching to ensure that the pitfalls in the partnership relationship do not sabotage the business. Become an affiliate and provide your clients with the Blueprint package to use with your coaching.
Watch for more tools. You have made a serious investment, both financially and emotionally to create this business. Do everything you can to make sure it succeeds.
Feel free to email your comments and questions to me.
My best wishes for your success,
Dorene
info@businesspartnershipsolutions.com
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