Starting a business can be frightening. You have to weigh the sacrifices against the potential for success. If you pour your time and resources into a new venture, there is always the possibility that you will lose a lot, perhaps everything. This is why many people choose to start a business with a partner.
A partnership can divide the risk and multiply the resources. In the best situations, this can improve the chances that your California business will succeed with the bonus of having someone to share the success with you. In the worst situations, however, you could end up in a disastrous business relationship.
Keeping it in the family
The most natural partner to choose for a business is your spouse or best friend. You have known your friend since high school or college. You live every day with your spouse. It may seem safer to go into business with someone you know than to take a chance on a stranger. However, many entrepreneurs discover that they never really know these people until they partner with them in a business venture.
To avoid losing the business along with the relationship, you and your partner will need to separate the two. If you are unable to speak openly and honestly about the difficult decisions you may have to make in your business, your partnership is likely to fail, and your relationship along with it. More critically, attempting this partnership without and strong, comprehensive partnership agreement may place your financial future at risk. A handshake may work between friends, but it’s not enough to protect business partners.
Red flags
Once you have chosen a partner, there may still be factors that can make the partnership unstable and jeopardize the success of your business. For example, if your partner exhibits any of these behaviors, your business may be on shaky ground:
- Being less willing or able to make the personal and financial sacrifices necessary for starting and running a business
- Becoming nervous when the business is not immediately successful
- Regretting their decision to partner with you during normal periods of struggle
- Revealing a difference in goals for the company or business values in general
- Clashing with your personality
- Conducting business in an unethical or untrustworthy manner
Even if you are leaning toward choosing your long-time friend or spouse as your partner, it is wise to do some research on his or her past business ventures, financial history and legal difficulties. If your potential partner has a past with bankruptcies, clashes with clients or previous failed partnerships, you may want to consider whether it is worth the risk. In any case, the best protection you can provide for yourself and your business is a strong partnership agreement that covers many areas of your professional relationship.