Jun 3, 2022 09:00 EDT
NEW YORK, June 3, 2022 (Newswire.com)
iQuanti: When it comes to forming a business with a partner, a business can get a lot more complicated. The complexity arises due to the fundamental conflict of interest in trying to navigate complex issues while also preserving a personal relationship. That’s not to say that going into business with a partner can’t be a great choice – many successful empires were built on personal partnerships. But before diving into any business plans with a partner, these are some things to consider.
1. Is the Partnership Necessary?
Before diving any further into the idea of starting a business with a partner, both partners should try to understand if the partnership is necessary for the business to operate. Yes, having a partner can seem appealing when starting something new, but in some cases, a partner can hold the business back.
If a partner is not absolutely necessary to make the business run, first consider other less formal business relationships that won’t threaten the business.
2. Talk About Values and Goals
While it makes sense that partners would have similar values if they’re planning to build a business together, it’s important to take the time to explicitly share those values with each other. Partners should consider both personal values that are important at work and values that the new business will support (and maybe even require from future partners or employees).
Next, outline and compare the partner’s goals (both as an individual and for this specific business). If goals are similarly aligned from the outset, partners can avoid tension as the business matures and hits points of success of failure along the way.
3. Define Roles & Responsibilities
Some complementary partnerships combine the creative strengths of one partner with the analytical strengths of the other. However, if both partners are working within similar roles or if both partners will need to wear many hats to help their business launch, roles and responsibilities in the partnership should be clearly defined.
Consider building out 1-, 3-, and 12-month plans: where will the partners focus during these timeframes and how will success be measured? How will roles and responsibilities evolve as the business grows? At what point of maturity will the partners need to hire to support their work?
4. Protecting Livelihoods & the Business
A corporation is built to assign liability and responsibility to its owners: so one of the first steps in building a successful partnership is lining up the protection for both partners and business. Things to iron out include personal liability insurance, health insurance, and life insurance.
While a term life insurance policy can make sense for coverage in the event of a partner passing, many new business partnerships ask, “What is whole life insurance and how can it benefit my business?” Given the cash value component of many whole life insurance policies, it can actually be another source for personal businesses to access liquid cash flow, making it a viable choice for a life insurance policy for a prospective business owner.
5. Meeting with a Tax Professional
Few things are more burdensome than sorting out tax details, especially in the case of a new business. Rather than bearing the brunt of paperwork and turning to the internet for answers, new partners should set up a meeting with a local professional to discuss options.
A tax prep meeting should be done before the partnership is cemented, as the business will need to be set up properly to avoid tax penalties (especially against a single partner) or structuring the business poorly to limit growth.
6. Craft a Business Plan
Sure, talking about a business partnership can be fun, but actually getting it started is a completely different ordeal. In order to avoid finger-pointing or fumbling down the line, consider contracting someone to craft a well-rounded business plan. Within that business plan should include all aspects of the business, and it can be used both as a roadmap and as a tool to sway additional investors into supporting your business.
While it can act as a guide to launch your business, business plans can be adapted and amended as the new business and partners grow.
Teaming up with a partner for a new business venture can be an exciting experience and offer coverage for skills not central to the founding partner. With the right tools and discussions in place, new partners can avoid common issues and maintain a strong foundation from the start that helps your business flourish.
Source: iQuanti, Inc.