From time to time, I have clients asking me about partnership. Does it make sense to buy a franchise with a partner? Sometimes they might be afraid of risking everything, so they want to have somebody to share that risk with. Other times it’s, “Hey, I’ve got the financial component. I want to get somebody to do the operational component.” Whatever it is, they’re thinking about partnership.
The Risks of Partnership
Well, one of my favorite sayings is: there are two ships you never get on, a sinking ship and a partnership. Now, I say that a bit tongue-in-cheek because partnerships can work, but they work under the right circumstances. If you’re going into business with somebody and you’re thinking, “I’m only going to do this if you come on with me,” and they’re thinking the same way, you’re probably creating opportunity for both conscious and subconscious delegation of accountability and responsibility, which can lead to future problems.
What Makes a Strong Partnership
In an ideal partnership, both of you are saying, “This is the right business for me. I’m going to do it even if you don’t come on board. I can hire somebody or bring the resources that you can, but it would really be good if we could do it together.” Finding that partner where each partner has that thinking is key.
The other factor, folks, is to have a very comprehensive shareholders’ agreement. What are the different aspects you need to consider and agree to before you start the business? When things don’t go as planned or when something goes wrong, how are you going to handle it? What about key person insurance? What about if you want to buy each other out? There’s a myriad of things to consider. I actually have a document I can share with you on all the things that go into shareholder outlines.
Making It Work
You both want to get to the same page, and you both want to be as committed to the business so that you can make it work. Great partnerships happen when you figure out all of the critical details ahead of time, and you figure out how to share the profits, because if you’re in partnership, it’s likely that the business will need to feed two or more families.
Yes, partnership is still a viable strategy under certain conditions. If you’re thinking about this pathway, I’d welcome an opportunity to explore some perspectives and answer whatever questions you might have. Let’s have a discussion to explore possibilities. Book now.
