You and your friend have decided to form a partnership, and the two of you plan to share equally in the responsibilities of running your business. You’ve always dreamed about going into business together and now, you’re both ready to turn the dream into reality.
Before you and your friend form your partnership, it’s important to take a realistic look at potential pitfalls. You must both have a clear understanding of what’s at stake before you make things official.
Watch out for these partnership pitfalls
These are some pitfalls that can put a lot of strain on your relationship with your business partner, as well as the company:
- Starting a partnership because you can’t afford a sole proprietorship. Ideally, both of you would bring funds to the table to get the partnership off the ground. If you can’t afford to start a business on your own, you can’t afford a partnership, either.
- Expecting your relationship to last if the partnership fails. The business has to come before friendship. If you aren’t flexible, this can create problems between the two of you that could potentially end your relationship.
- Operating without a formal agreement in place. Take some time to figure out how you will address problems as they arise.
- Loss of autonomy can derail your partnership if either of you is unwilling to compromise on occasion.
- Blurring the lines of business and friendship. Personal issues may arise between you and your partner if you’re friends. This can do a lot of damage to both your company and your friendship.
- Neglecting to create an exit strategy. You must have a clear plan in place that allows either partner to walk away if necessary.
Forming a partnership with your friend means that the burden of decision-making is shared between the two of you. This can be a great thing if you do your research before signing on the dotted line.