Creating a new business idea is exciting, and it can be even more thrilling when you have a business partner by your side. However, for a partnership to flourish, it's important to discuss the day-to-day operations and long-term vision for the business right from the start.
From taking the time to set collective goals to establishing trust, 11 Young Entrepreneur Council members share the first steps new business partners should take when launching a venture. Follow their advice to set yourself up for success when starting a business partnership.
In order for a new business partnership to be successful, what's one step both parties should take first, and why?
1. Draft a co-owner agreement
You should put in place a co-owner agreement to make it clear how decisions will be made, how profits will be split, and what happens if someone leaves the company. It is mostly rainbows and sunshine when a new business partnership starts, but it is smart to have a legal game plan, particularly if things go south. As the old saying goes, “Hope for the best, but plan for the worst.” —Doug Bend, Bend Law Group, PC
2. Practice being a good partner
It's usually hard for new entrepreneurs to understand that a partnership is about giving, helping, and uniting around common goals. Try to be a partner for someone else before looking for a partner for your business. A real partnership in business is about getting through the hard times. Imagine different situations you might be in and the way you would act. —Dmitrij Żatuchin, DO OK
3. Identify your strengths and weaknesses
The key to building a successful business partnership is identifying your strengths and weaknesses. If you and your partner both have the same weaknesses, you both deserve to know that in advance. For instance, if you both excel at marketing but have poor public speaking skills, it could cause issues when it's time to promote your next product or amplify brand awareness on a podcast. —Chris Christoff, MonsterInsights
4. Discuss your long-term goals
One of the first steps to building a successful partnership is evaluating where each partner is in their career journey. If one partner is nearing retirement and the other is just getting started, their goals will be quite different. It doesn’t mean it won’t work, but knowing where each partner is with their long-term goals related to the business is the key to building a partnership based on integrity. —Jared Weitz, United Capital Source Inc.
5. Talk money in advance
Talk about the money part before you get started. It can be tempting to skip the money talk and start a venture with your friend, but finance is one matter that can lead to serious conflicts. Make sure to talk things out before you start and get everything documented. That way, you both are on the same page when you're talking about your share of profit. —Josh Kohlbach, Wholesale Suite
6. Clearly define roles and responsibilities
Both parties should clearly define each other's roles and responsibilities. Doing what's needed in the moment may work for the short term, but it won't work for long. Defining roles and responsibilities eliminates opportunities for disagreement by giving each partner control over their domains. Employees and customers can also benefit if they know which partner handles which aspects of the business. —Stephanie Wells, Formidable Forms
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- 10 Lessons I Learned From Building and Managing a Remote Team
- The Pros and Cons of a General Partnership in Business
- Preparing the Perfect Written Partnership Agreement
- 7 Ways to Prevent a Business Partnership From Going Bad
- Pros and Cons of Limited Partnerships
7. Align your expectations and key indicators of success
Both parties should clearly lay out their expectations for the partnership and the key indicators of success that matter to them. When expectations are aligned, both parties better understand what the other is trying to get out of the partnership. When the key indicators of success are outlined, both parties know what it is they are trying to influence, which better guides their decision-making. —Akshar Bonu, The Custom Movement
8. Get to know your counterpart well
Before entering any partnership or negotiation, it is important to make sure your counterpart is reliable and can hold up to their promises. Vetting someone can be a tool to make sure you’re not wasting time, effort, and resources when it is not worth it. Getting to know a person could take time, but is crucial, especially if you’re aiming for a long-term relationship. —Brian Pallas, Opportunity Network
9. Get things in writing
Whenever a new business partnership begins (and sometimes even for personal partnerships), one crucial first step is to put things in writing. Drawing up the business terms in writing doesn’t necessarily require legal documentation drawn up by a lawyer. You just need to have something tangible as a reference for everyone to review in person if miscommunications or arguments ever arise. —Richard Fong, Assured Standard
10. Set objectives together
Be clear on what the objectives are. Once these objectives are set, it will be easier for both parties to make decisions and work together. Then, create a clear business plan. This will help both parties understand how they can achieve their shared goal, which may include identifying potential obstacles and risks, as well as outlining potential solutions. —Kristin Kimberly Marquet, Marquet Media, LLC
11. Establish a foundation of trust
Trust is the foundation of any successful partnership and should be the first item on the docket for any new business relationship. Establishing trust requires using honesty, humility, and the principle of honoring your commitments. Without these, it is impossible to rely on your counterpart, which creates unnecessary work. Prioritizing trust will ensure the longevity of your business and partnership. —Nic DeAngelo, We Buy Loans Fast
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