So You Want to Start a Business with a Partner

August 28, 2013

This topic is close to my heart as I see people enter into really bad business deals everyday. A huge part of my day job involves mentoring new startup founders, and dealing with the compatibility issues that most people deal with when it comes to running a business.

The fact of the matter is that most people who join or start a company early on don’t put in a lot of thought in their partnerships. I mean why would you if you like working with your friends. Most tech startups, in particular, are normally founded by 2-3 developers who start working on a piece of code and start seeing the potential later on.  On the other hand, I’ve seen really smart people give away 1/2 their company to someone just so they can write them the software. I’m not saying that good developers are easy to come by, be cautious about who you work with.

Here are some of my tips to make sure that you’re in a mutually beneficial partnership even if you’re not working in a startups. 

Partner with someone who has different skills than you do. What I mean by this is find someone who fills in the gaps. Ie- if you’re the operations guy/girl, then partner with a marketing and business development person. Doubling on the same skill set (unless it’s a tech role) early on is a waste of resources.

Determine equity based on responsibility. Just because you entered into a partnership with someone doesn’t mean that you automatically give them 50%. Take a really close look at what you each bring to the table and determine what each role is worth.

Make it as official as you can. Quickly research any pending copyright or trademark issues before you name your company. There is nothing worse than busting your butt to build a name for yourself and then having to change it later on because of copyright issues. While you may not have the money to register it right away, knowing that you’re not infringing on anyone else’s right is a great boost.

Look into business banking  the moment that money gets involved.  Make sure that you have a separate bank account and that funds can be tracked easily. Having access to a business bank account allows you have more control.

Have a contingency plan. Know what you’re going to do if your products get delayed, or your server breaks down helps delay the panic that sets in.