There is a lot to consider when taking the leap into small business ownership. The ante is upped substantially when any entrepreneur decides to open a brick-and-mortar fitness studio. The everyday stresses of typical business ownership become magnified as rent payments, utility bills, and payroll become a monthly reality. It seems logical that having a partner to share the experience – and workload – would be a win-win. No one person can truly be the jack-of-all trades and excel at all aspects of business ownership. And having another motivated professional to bounce ideas off of, to ground you, and celebrate successes can be a nice set-up! But before entering into legal business partnership, it is imperative to keep an open mind and consider what the partnership will actually be like on both a micro and a macro level.
I have drafted a two-part blog article, because this is an important topic to tackle! Part 1 addresses points to consider BEFORE you sign on any dotted line and create a partnership. Part 2 offers insight into the necessary details to consider once you decide you will for-sure move forward and join forces.
I have generated a list of conversation starters and actionable items here that really pack a punch with your would-be business partner. An up-front assessment of where you both are, related expectations, and where you think you might go can save a lot of hassle in the future!
1. Identify if your vision for the business actually aligns.This includes not only taking a big picture look (ie We will stick with running one studio or grow to ten?) to having conversations on the reality of daily roles (ie What will both our roles look like as we work ON the business and IN the business, separately and together, and is this acceptable for each party?). This can simply be a few discussions over coffee as you learn how to (and if you can) effectively communicate and align ideas and goals with your would-be partner.
2. Strongly consider writing the business plan, together.A tangible business plan is very important for many reasons. It will be a non-negotiable if you seek any sort of financing. But even more importantly, putting fingers to keyboard and writing a business and marketing plan with your would-be partner opens up conversations and raises questions that you might not otherwise think to address with each other. Consider this the first step as you prepare to enter into this very serious “marriage”. It is a great way to observe work-styles, to determine how effectively you might collaborate, and create a clear plan in writing that each of you has an viable voice in. It is great to have this plan created so when you do run into challenges in processes later, you can fall back-on these plans that you, jointly, created.
3. Open up your financials and be prepared to get very real.A business partnership, plain and simple, means a co-mingling of finances. Each person will bring their current reality to the table, and it is imperative to talk this out. Financing a start-up, surviving the often-stressful early days, creating stability, growing the business and beyond will always include financial discussions. Learning how to navigate these discussions honestly early-on will be a good indicator if you will be able to do this successfully as true legal business partners in the throes of operations.
4. Discuss what a “break-up” could look like.
Take the time to really analyze the details of your potential legal partnership. Individual lives, circumstances, and goals change – that is simple truth of a life in motion. Can you go separately peacefully, if it comes to that? Before even considering putting this partnership into writing (which you will, as you move to Part 2 of this blog article), consider having this candid chat with your potential partner. Toss out all kinds of scenarios and see how it lands and how the options feel as you explore them together, should a separation become part of your business reality.
5. Take your time. Entrepreneurs are, by nature, motivated, driven, passionate people. Allow yourself time to take the “cosmic deep breath”. Explore the ins and outs deeply BEFORE signing-up for a business partnership. If you need more time, discussion, or evaluation, take it now. Ask many questions: Can you truly survive the challenges of a partnership with a friend or family member, if that is the case? What are your strengths and weaknesses as a professional, and does your would-be partner compliment you? Why are you really choosing partnership over solopreneurship? The list of questions goes on. Brainstorm and create a Q and A – then go over it with your potential partner to further evaluate if you are really a good “match”!
These five tips will allow you to better determine if you and your potential partner have what it takes to make it for the long-run. Statistically, small businesses close every day, which taxes people personally, financially, and emotionally. Small businesses in partnership can prove even more challenging as folks constantly work to align and flow amidst the normal stresses of business ops. Perhaps the steps above will be the conversation starters that allow you to move forward with your would-be partner or to pause and re-assess. The seriousness of a legal business partnership should never be underestimated – and due diligence on the front end will save time, money, relationships, and even the business in the long-run.
Post was originally published by the Association of Fitness Studios, where Bahneman serves on the Industry Advisory Panel.