When entering a partnership with family or friends, it’s important to assess the strengths, weaknesses and dynamics of the relationship. Following these seven tips will help you form a strong foundation for your business and partnership.
Dallas (PRWEB) February 25, 2015
When entrepreneurs are seeking partners for a new business venture, family or close friends might seem like a natural solution. These individuals have your best interest at heart, but unfortunately the stress of entrepreneurship can take its toll on vital relationships. To help business owners consider the implications of this difficult decision, David Kiger, founder and executive chairman of the global logistics company Worldwide Express, outlined seven tips for establishing a business partnership with your eyes wide open.
“When entering a partnership with family or friends, it’s important to assess the strengths, weaknesses and dynamics of the relationship,” said Kiger. “Following these seven tips will help you form a strong foundation for your business and partnership.”
1. Establish Goals and Expectations.
First and foremost, the goals of the partnership and the business should be clearly outlined. Get together and discuss each person’s role, learn what each one wants to accomplish, and assess if the roles are a true fit. Any concerns regarding the business should be addressed at the start before permanent decisions are made.
2. Put Things in Writing.
No one wants to consider the possibility that the business could fail, but it needs to be discussed in advance. Consider talking to an attorney about a legally-binding agreement documenting investments and the process for resolving issues should things not go as planned.
3. Decide on the Structure of the Business.
There are a variety of options – from a limited liability company to a corporation – each with their respective advantages and disadvantages. Do your research to understand the difference between these structures and agree on one that makes the most sense for you and your partner.
4. Keep Work Separate.
One major downfall of working with a close friend or relative is the personal relationship getting in the way of the business, or vice versa. “They might think they have significantly more leeway to do what they want, and you may have little leverage over them. This is another important reason to put things in writing and establish clear goals from the start,” said Kiger.
5. Have Reasonable Expectations and be Honest with Yourself.
Spend some time considering the dynamics of the relationship, and honestly assess what you can reasonably expect. “As with anything, it’s good to have reasonable expectations. You should know your friends and family well enough to know whether you can reasonably make a partnership with them work,” said Kiger.
6. There May be No Going Back.
If things go south and your business does not succeed, the relationship with your business partner may also fail as a result. “Even if you view the failure as water under the bridge, they may not,” said Kiger. “They may also think you owe them something, resulting in added strain.”
7. Know That Things Can’t be Unseen.
Going into business with someone can be an eye-opening experience in which you get to know each other on a new level. Your respect for their competency and business acumen may grow, but on the other hand, you may also find out your friend or family member is far from perfect.
“You’ll certainly face challenges along the way,” said Kiger. “With foresight, clear communication and quick action when things go wrong, you and your partner will ensure not only the success of the business, but also the preservation of the relationship.”
About David Kiger
David Kiger, founder and executive chairman of the global logistics company Worldwide Express, offers advice to entrepreneurs through his blogs, Business Chat and Cultivating Knowledge, Driving Action, and his popular Twitter account (@DavidKiger).