Wonderful things happen when like minded people with great ideas come together to pursue a business venture with hopes of turning their dreams into realities. However, like all great relationships, it takes work and boundaries to sustain a successful business partnership. About 60% of business partnerships fail, so how do you avoid becoming a statistic?

Here is what to avoid, in order to create a successful business partnership


1. Not getting a partnership agreement in writing

Once you’ve made the decisions to go into business, a partnership agreement simply outlines the rights, responsibilities and duties that each partner has to the company and to each other. Talking out responsibilities, roles and goals is a great start. But you will need to ensure that everything outlined and detailed in a partnership agreement so that all partners are on the same page.  

2. Mixing personal and business relationships

We are naturally more inclined to go into business with someone we already know and trust. However, money can change the dynamic of even the strongest relationship. A close personal relationship can make important conversations about goals, responsibilities and finances difficult, not to mention the “what ifs” such as: What if one partner wants to terminate the partnership? So, think twice about this type of arrangement. Doing business with family or friends can be rewarding, but if the partnership fails, you run a high risk of ruining the relationship. 

3. Partnering with someone because you can’t afford to hire them

If you know someone in your industry who produces the work that is in line with your company’s vision, then hire them rather than partnering with them. Choosing to hire them as a contractor or as an employee can avoid the unknowns associated with the financial obligations of a partnership. 

4. Choosing someone who doesn’t align with your long-term values and goals

Before getting into business, there should be a conversation about each partner’s goals. This should cover questions such as: 

  • Do they want to be an entrepreneur? 
  • What are their long-term objectives? 
  • What is their vision for the company? 

Ensuring that each partner is aligned with the same values and goals will evade friction in the future. One partner may use the business to earn a modest living where the next may want to take it global, hire staff and expand. To avoid long-term conflict the company vision should be agreed upon in advance in a vision statement. 

5. Sharing personal or corporate capital rather than expenses

In a perfect world, a business partner is a person with full integrity who would never take your earnings and run. Unfortunately, these situations happen frequently. Giving up your capital regardless whether that refers to resources, money or property, gives away your power. Instead, work out which expenses will be shared through a contract. 

6. Not performing a yearly check-in with your business partner

Making sure the lines of communication between you and partner are kept open is vital all year round. But doing an annual check-in to see if you’re both on the same track is key to avoiding devastating problems in the partnership, as some elements of any business change frequently throughout a year. Schedule check-ins to ensure that you still have the same end goals in mind. 

7. Not creating an exit strategy

Looking at the realities of the partnership should one party fold, or things not work out, is a smart step to implement to ensure all of your angles are covered. Prenups are implemented for marriages to protect the parties if everything folds. Similarly, a business partnership agreement must outline what will happen if you or your partner walks away, or provides buy-out options for either of you. This can be done simply and in a straightforward way to ensure the business isn’t jeopardized in the process. 

Thinking of getting into business with a partner? Here are 8 things you should include in a small business partnership agreement.