“A friendship founded on business is a good deal better than a business founded on friendship.” – John D. Rockefeller
In the current world of startups, starting a new business venture with a partner—as opposed to on one’s own—continues to be a popular trend. Most people get into partnerships with friends, colleagues or classmates who are like-minded and who have skills that complement their own. Starting a business with a partner offers multiple benefits, not the least of which is having someone to share the many responsibilities of running a business. But a partnership can quickly go bad if you don’t give it ample thought and planning.
In our last MaRS Best Practices session, Jeff Dennis, a serial entrepreneur, lawyer, author and the entrepreneur-in-residence at Fasken Martineau, and Tracy Hooey, a partner at Fasken Martineau, addressed the issues that one should consider before “jumping into bed” with a partner.
Dennis shared four tips that entrepreneurs should follow when considering entering into a partnership agreement with a co-founder.
Tip number 1: Get to know your partner first.
A partnership is like a marriage—it’s easy to get into, but it’s messy to get a divorce. So it’s important that you make your partnership decision carefully. More often than not, entrepreneurs spend more time interviewing potential employees than they do actually getting to know their partners. Get to know who your partner really is while discussing the goals, values and timelines for your prospective business.
Tip number 2: Get it in writing.
Tip number 3: Define your roles and responsibilities.
Clearly define the roles you and your partner will take on and the expectations you have of each other. Hold strategic planning sessions with your partner, and once your business is underway review your plans quarterly and annually to ensure you are moving toward the goals you set before starting the business.
Tip number 4: Plan your exit strategy.
We often assume that a partnership will last forever, but that’s not always the case. You should always have an exit strategy in place.
Watch this video to learn more about Dennis’ four tips, and about what separates leadership from management:
Check out the complete MaRS Best Practices presentation here to see more of what Dennis and Hooey have to say about the nuts and bolts of partnerships, including the legal issues that can arise. For your reference, the presentation slides are posted here.
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