A thread on business partnerships.

Everyone seems to have nightmare stories about them.

How do you make them work?

Here are some lessons learned.

Have a written "divorce" planned at the start.

My favorite is a push-pull single-trigger buy-sell:

Any party can decide they want out. Party A offers Party B $x/share. B has 60 days to sell or buy out A at the same terms.

Lawyers can put this in.

Mentally prepare yourself to be rich and not king.

This is easier said than done.

You have to put your ego and often your pocketbook as a secondary thing to have everyone winning together.

Have a clear tie-breaker system.

50/50 partnerships are a disaster waiting to happen.

You're not always going to agree -- I promise.

Someone needs to be the alpha.

If no one wants the job, reconsider your partner choices.

Create partner alignment around goals.

Talk about your near-term and long-term goals.

Are they aligned?

Write them out. Have everyone sign off on them to verify they are.

Things like cash flow, cash in, etc all matter.

Choose the right partners.

Business partnerships are like a marriage - except they often last longer and are harder to exit.

Just like marriage though, who you choose is the most important decision. Don't rush it.

Clearly define roles.

Too many partnerships start off without defining responsibilities and roles.

You look up and one person is owning 20%, doing all the work, and not getting paid.

Write. It. Down.

Be honest.

From day 1, your partnership needs to be a safe space to tell the truth.

If you can't do that, it's akin to getting married to someone for their looks. It's going to end badly.

Spouses need to be aligned as well.

If you're going to deal with a married person, remember there is a "virtual" person at the table -- the husband or wife.

Talk about it: Is everyone's other ok with this? If not, you got a timebomb on your hands when they sue during divorce.
Paper that stuff.

You need to have a lawyer represent each partner prior to the formation to protect their interests.

Get the legal documents done right by a real lawyer who has done it before.

And read them to make sure you understand the deal.

Always assume the best intentions.

The same secret to staying in a happy marriage is the same in business -- always assume your partner has the best of intentions.

It's simple but it works, I promise.

Run the partnership professionally.

Too many businesses intermingle personal expenses with professional.

It creates total nightmares when you are arguing about whether it's fair for a 29% partner to expense their golf outings.

And that's it.

Thanks for tuning in.

What am I missing?


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