5Jan
A business team shaking hands to seal a deal

Great Partnerships: A Key To Entrepreneurial Success

A business team shaking hands to seal a deal

Marriage is the ultimate partnership, and it takes work to make your marriage successful.
Business partnerships take nearly as much work.

Statistics show about half of the marriages in the U.S. will end in divorce. The dissolution rate for business partnerships is just as dismal.

That’s why successful partnerships are so crucial for entrepreneurs just starting out.

You Don’t Have to Do It Alone

Partnerships are the unsung linchpin of the entrepreneurial culture. Without partners, I never would have gotten started in my own business. I needed their expertise and capital. Period.

Choose Your Partners Wisely

You need to pick partners who are skilled, committed, and smarter than you are! This generally rules out your brother-in-law, your best friend and your classmate. Partners are much more than pocketbooks – they can share the load and be mentors. Just make sure you have some knowledge to bring to the table, too.

Equality is important in your business partnerships, just as equality is important in your marriage.

Any partner that feels superior in ALL areas isn’t a good partner. So spend a lot of time asking questions, researching your idea, and backing it up with detailed financials. Then, assess your strengths in the following areas:

  1. Intellectual ability
  2. Energy and enthusiasm
  3. Willingness to risk your money and personal credit
  4. Ability to work for little/no short-term financial gain

The more strengths you possess, the easier it will be to find experienced, wealthy partners. Work on 1-4 above, then cut a fair deal with someone who is talented so you can work together toward a mutual reward.

Ask Yourself: What’s in it for them?

After 25-30 different partnerships in the past 10 years, I can tell you that finding a good partner and structuring a mutually beneficial deal is still damn hard to do! But it’s worth the time and effort.

I make the most money when everyone involved is happy and well-rewarded.

It’s like my father always said, “On your way to the top, the more people you take with you the faster you will get there, and the longer you will stay.” He, my wife, and all of my business partners have made me the man – and the entrepreneur – I am today.

Are you considering a business partnership? What do you have to offer?

 

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About Alex Lawrence

Alex has been a successful entrepreneur for 20+ years. His current venture Lendio ranks #34 on the Inc. 500 list. Alex earned a BS degree at the University of Utah and his MBA at Weber State University, where he is Vice Provost and Director of the Entrepreneurship Program. If you want to talk with Alex about business and entrepreneurship (or other questions), email him (alex AT startupflavor DOT com), or you can find him on Twitter @_AlexLawrence.
  • Devin Day

    Alex, excellent post.

    Questions:
    1) when you have an idea or are starting a project and you find a good partner how do you approach the the opportunity split – is it based on what they bring to the table or do you 50/50?
    2) If you don’t do 50/50 how to you manage any potential frustrations that people feel that always tend to pop-up?

    Thanks!

    • I’d be leary of a 50/50 deal. It really depends on what you bring to the table, and I would make it open to discussion. I’ve never set up a partnership with only two people, and with 3 or more I think it’s easier to see what they bring to the table, yet it can be harder to manage.

      I’d talk to a corporate attorney (not just an LLC chop shop) and a CPA (esp. who has CFO experience). That’s what I did, and I got specific advice for my situation. I actually talked to 3 attorneys and 2 CPAs… slightly different answers, but looking at where their answers lined up, I feel like I found a pretty clear path for my situation, and then DRAFT AND SIGN AN AGREEMENT. That written agreement is important, because it imprints in your mind and their’s that it’s a big deal- that you have responsibilities to each other.

      • Devin Day

        Thanks Dustin – I appreciate your response. I have some things I am working on so this was helpful insight!

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