The Best of Times

John Argrow

Congratulations! You have a business partner. Before you get too far down the road together, take crucial time to document your roles, your boundaries (possibly including performance, metrics and compensation) and how you will resolve conflicts.

Do this while things are good, because it will be much easier than when things are tense. You’ll be glad you did.


Before You Add a Partner

Pat Dolen, TAB Facilitator, TAB Houston

So, you are thinking of acquiring a partner in your business. Maybe you want a partner to spread the workload or liability. You could have differing areas of expertise and want to become a “one stop shop.” Or maybe you’re looking for someone to take over when you retire.

Either way, think before you get “engaged” and sign those final papers! As Lamar Curtis of IAG put it, “a partnership is like a marriage without the good parts.” Before moving forward, consider these suggestions.

1. Each party invests the same amount of money.
2. A change in equity equals a change in authority.
3. You have to trust all parties involved, even minor partners.
4. An exit strategy must be as clear as possible before entering the partnership.
5. Be sure a full-fledged business plan is in place, including all stages of the business.
6. Get a signed management agreement from all parties involved.
7. Work with an HR consultant to predict behavior and discuss potential hotspots.
8. Expect to invest 20% more money and 20% more time.

These pointers can come in handy even if you are considering a strategic business partnership or affiliation. As we all know, “breaking up is so very hard to do.”


Having challenges with your business partners?

Would you like to learn strategies for creating better alignment with your partner?

There are lots of people in a long standing business partnership who are not satisfied with the status of the relationship. They may feel stuck, frustrated, angry or all of these. They know they’ve been silent far too long, but just don’t know what to do. Whichever side you are on TAB can help you through these issues, come up with a plan and work toward solving business partner challenges.

A Partnership Charter

Capturing the intentions, expectations and agreements

–        the collective reality of the Partnership -


What it is


A Partnership Charter is a written document that records your understanding and serves as a guide as you move forward in your partnership.


What it is NOT


This is NOT meant to be a legally binding document meant to create legal safeguards that compel certain conduct among the partners.


Why take the time to work through this process?


·         The very act of putting your intentions on paper will move you from vagueness to clarity

·         It’s a lot easier to work through issues when they’re hypothetical (e.g. what happens if one of us dies or becomes incapacitated?) than when you’re faced with a real life situation.

·         Time fades memories

·         It can become the basis on which you develop any legal agreements (saving you time and money with your lawyers down the road)

·         Like so many things in life – you will leave your business one way or another, and may do so on different timetables. Documenting a fair way for any partner to exit and for the remaining partners to compensate the exiting partner is a lot easier to do when you don’t know who’ll be exiting and when.

 How do we do it?


·         Start at the top: Develop a vision for the business and understand personal motives

o   Why are we building this business?

o   What do I want to get out of this (now and in the future)?


·         Are we aligned in our values?

·         You can get people with different skills and personalities to form effective partnerships (in fact you leverage the diversity) but having different values can be a show-stopper.

·         What are your core values? Some examples:

– Utilitarian: (we need to get a return on anything we invest € or effort in)

– Social: (helping others, being a responsible employer are important)

– Aesthetic (we don’t mind spending money to make sure the place looks good, we want employees to look a certain way)

– Individualistic: (I want to be the leader or I don’t want to be in a high profile position)

– Theoretical: (I was us to research publish cutting edge articles and to be the thought leaders of our industry).

·         How hard do we want to work? For how long?

·         Do we agree on management style? Culture?


·         Roles and Responsibilities:

o   What role do each of us want to play?

o   Do we have the skills it takes to be effective in that role?

o   How will we hold each other accountable for results?


·          Finances:

o   How will we make key investment decisions (e.g. new business ventures, capital expenditures)

o   What’s our policy on credit? How much credit are we willing to extend (if any).

o   How well capitalised should the business be? What’s the right amount of cash that should be maintained at all times? (what is your war chest formula?)

o   How do we feel about debt? What do we do if the business needs money? Are we willing / able to use personal assets as collateral? Must we do so evenly?

o   What’s the right remuneration for each of us? Do we separate salary and distributions of profits? If so, how?


·          Ownership issues:

o   Do we currently view our interests as equal?

o   What if one partner wants out – how will we value the business?

o   If something happens to one of us, should we have a buy/sell agreement that forces the liquidation of that partner’s interest using an agreed-upon formula (e.g. do we feel it’s wise to avoid inheriting one of our spouses as a new partner?)

o   How, and under what conditions, would we take on a new partner?

o   Are there conditions upon which we would want to automatically trigger a change in ownership? Death and disability are obvious but what about drug or alcohol abuse?

Irreconcilable differences? Family circumstances leading to one of the partners not being able to commit to work?



Next Steps?



If you want help putting together your Partnership Charter, please email [email protected] or contact your local TAB facilitator.