Great businesses are founded on great partnerships. But great businesses can also be destroyed by bad partnerships.
These entrepreneurs—and members of The Oracles—share their hard-won wisdom about what to watch out for before joining forces with a business partner.
1. Trust your gut and get it on paper.
All of my success has come from successful partnerships: co-authoring the Chicken Soup for the Soul series with Mark Victor Hansen; The Success Principles with Janet Switzer; and managing my companies with Patty Aubery and Russ Kamalski. My top two criteria for partnering are: One, I must like them and trust the person. Two, they have to bring something to the table that I cannot myself provide. Liking them and trusting them are subjective things, but I’ve learned to trust my gut. If anything doesn’t feel right, I don’t proceed.
One of the biggest mistakes you can make when partnering is not sufficiently clarifying each other’s roles, boundaries, compensation, and exit strategies and then documenting them on paper. While it’s important to trust each other, it’s also important to ensure you are clearly on the same page before you start. People often have different understandings and interpretations if they are not codified in writing. — Jack Canfield, co-creator of the billion-dollar Chicken Soup for the Soul franchise, author of the NYT bestseller The Success Principles, and CEO of The Canfield Training Group
2. Know the partner for at least a year.
Before entering a business partnership, my top criterion is to ideally know someone for at least one year. (Some psychology and scientific studies say that people truly show who they are after one year.)
It’s like dating—you have to date before you get married. A business partnership is a marriage. So you need some short-term “dating projects” in business. Become good at reading people and back it up with references. If projects don’t work out, you move on. It’s like choosing not to see someone after three dates: you haven’t made a long-term commitment and will be OK.
The biggest mistake you can make in partnering is going into it too quickly. Make sure you outline the responsibilities of each partner. Otherwise, you might get stuck doing all the work.
In the operating agreement, write out the partner’s responsibilities, your rights and the exit strategy. Something like, “You’ll work approximately 30 hours doing A, B, C, and five hours doing Z.” The more clear you are, the less likely it is to fail. —Tai Lopez, investor and advisor to many multimillion-dollar businesses who has built an eight-figure online empire; connect with Tai on Facebook or Snapchat
3. Use math, but don’t forget the fun.
Partnerships can be wonderful, but also can become your worst nightmare. Use math to decide on the right partners. That’s right, math. If one plus one equals two, that’s not the right partnership for you. One plus one must equal three! A partnership must be more than the sum of its parts; otherwise, you’d just as well outsource different parts of your business.
You should also partner with someone who is…