I often joke that it's a lot like Bailey and I had a baby together after only a few dates.
Of course the decision to start this business together was a lot more calculated than that and we talked for almost a year before we actually incorporated. But we hadn't known each other long before we started planning The Local Kitchen. Obviously, Caitlin and I have a long history toether (being sisters) and we had ran a business together prior to the kitchen, so we knew we'd work well together. I met Bailey through Caitlin, as a potential business partner for us. We had no personal history together and there was only so much time before we had to decide whether to become partners or not. But now we share this incredibly important thing that we both love and want to see succeed. And we both understand that the best way to see it succeed is to keep the relationship between the three of us owners healthy and happy.
The smartest way to make sure you and your business are protected is to have a formal Partnership Agreement in place. You can get these done through your lawyer and ours quoted us around $3000, which there was no way we could afford then, or now for that matter. We plan to get one as soon as we have some money set aside but for now we'll just have to be very concious of the importance of keeping our relationship and interactions healthy. Looking back, I still would have waited to do an in-depth partnership agreement till we were about a year in. I'll explain why a little further in.
I read a really helpful book called The Partnership Charter by David Gage. In it he highlights a few things to be aware of and discussions to have amongst yourselves. I really recommend it if you're not sure where to start. I plan to reread this book when the time comes to discuss a partnership agreement again.
Coincidentally when we were starting to plan the kitchen another local business we looked up to was starting to have a few problems between the partners. This business was very successful and the partners started out as the closest friends so it was alarming for us to see them struggle and how it negatively affected their business. It showed us the importance of having these hard conversations early on and not to get caught up in the "honeymoon period" of starting a business that we were in at that time.
We printed off a Partnership Agreement template from the web to help us make sure we didn't miss anything and to help us get started. The one we chose asked questions such as:
- If one of your partners becomes disabled and is unable to work, will they still be paid their dividends? Or will there be a buy out agreement?
- In the event of one partner passing away, will their shares be automatically transferred to their spouse? Do you want to be in business with your partner's spouse if something happens to her? If not what will the buy out plan be?
These questions are depressing and hard but they're important to plan for. If one of these events happen, you'll be grateful not to have to pile the stress of dealing with the business on top of everything else.
Here are a few things that I've learned about my partners since we met, some before we opened but most after (which is why I say I think it was a good idea for us to wait a bit before making ours). These are not things that necessarily go into a partnership agreement, but they are things that can cause conflict when you're learning them. They are also things that would be pretty hard to ask directly and get an answer, most people don't know these things about themselves or they tell you what you want to hear without meaning to. These are more things to try to find out on your own about them as you work together.
- How does your partner feel about debt? Carrying a balance on a credit card?
- How does your partner react to stress? What are some signs that they are becoming overwhelmed?
- What is your partner's communication style and how does it effect your creativity and willingness to make suggestions? For example, if you have a partner who is very negative, does this challenge you to make your ideas successful or make you feel like all your ideas are getting shot down?
- How close is your partner with their family? Are there members of their family that require a lot of attention from your partner?
- Does your partner have a partner? A spouse or kids? How supportive are they of your partner starting and running a business?
- Where do your partner's strengths lie? How do their stengths affect you and things you do well at?
- What does your partner think "working hard" looks like? What sort of sacrifices are they willing to make for the business?
- If a problem arises how will you decide if it's important enough to bring up to your partner and when you do need to discuss an issue- how do you communicate with them in a positive way?
- What is your partners' main priority? To get rich? To make a difference in the community? To work in a field they love?
- How does your partners make you feel about yourself? Competant? Creative? Restricted? Frustrated? These feelings will get stronger over time so be honest with yourself and your partner early on.
- How does your partner feel about deviating from your business plan? Are they the type to like to plan carefully or use the momentum of a new idea to fuel changes?
- How does your partner react to feedback?
- What sort of things have happened to your partner in his/her past that may affect them? Have they been through a divorce? Lost a parent?
There's so many more. But I think being concious of the importance of this relationship and the need to maintain if for the long run will help you grow together and make your business be stronger. It really is like a marriage, just without the lifetime commitment. But it you find a business partner you respect and work well with, you could very well go on to work together on projects for your whole lives together. Being an entrepreneur can be lonely, having someone who gets it and you will not only be a valuable asset but also a huge comfort.