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The Power and Pitfalls of Partnerships

January 7, 2011

from Ask SCORE 

As an entrepreneur, the idea of partnership may be an attractive approach to launching a small business. Partners share responsibilities and workloads unlike solo ventures where the burden falls on a single person. Great partners work together and make up for what the other one lacks. One partner may be good at accounting and numbers while the other is an expert in sales and marketing. Combining talents will improve business and offer more opportunities than if there was only one person involved.

But partnerships have many potential downsides as well. Conflicts waste time and money, erode focus and strategic direction, cause emotional and financial pain and destroy businesses and reputations, says George Gage, a business mediator and partnership expert with BMC Associates in Washington, DC. Business schools rarely teach successful partnering techniques, and without proper preparation, partnerships are often doomed, says Gage, who has worked with many warring partners.

Gage, who is also author of The Partnership Charter: How to Start Out Right with Your New Business Partnership (or fix The One You’re In), lists seven cautions that would-be and existing partners should consider:

1)    If you think you are not “partner material,” don’t take the partner path.

2)    Use extreme caution when selecting a partner.

3)    If you don’t really need a partner, don’t get one.

4)    If it doesn’t feel good before you start, follow your gut and don’t do it.

5)    Don’t be fooled into thinking that legal agreements and documents will keep you out of trouble with one another.

6)    If you currently have a partner, and it does not feel like a positive working relationship, don’t just ignore it. Try to fix things.

7)    If there are unanswered questions or vague boundaries and responsibilities with current partners, address these issues while you are still getting along.

Another valuable resource for prospective partnerships is Nolo.com, the nation’s oldest and most respected provider of legal information for consumers and small businesses. Nolo’s Web site has a wealth of free information about partnerships, including tips for crafting fair, reasonable partnership agreements. Nolo-published books and other references can also ensure that these agreements evolve as the business grows and diversifies.

To learn more about partnership issues, contact America’s free and confidential source of small business mentoring and coaching. SCORE is a nonprofit association of more than 12,000 business experts who volunteer as mentors. SCORE offers free mentoring and low-cost workshops nationwide. Call 1-800/634-0245 for the SCORE office near you or visit online at www.score.org.

 

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