A thread on business partnerships.

Everyone seems to have nightmare stories about them.

How do you make them work?

Here are some lessons learned.

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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.

2/x

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.

3/x

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.

4/x

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.

5/x

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.

6/x

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.

7/x

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.

8/x

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.

10/x

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.

11/x

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.

12/x

And that's it.

Thanks for tuning in.

What am I missing?

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