Small Business Connections                                             May 2011

Partnerships - Keys to a Successful Business Marriage

I meet with many clients who are in business Partnerships or are debating whether to go solo, or take on a partner.  I have seen fruitful, productive relationships that result in a strong, growing business; I have also seen fraud, lawsuits, and destroyed businesses, families and friendships.

There is no question that a Partnership is like a marriage.  You will invest time, money and trust into building a business with a partner.  It is likely that you will have conflict and disagreements, at a minimum, as you make decisions about the business.

At the heart of a good Partnership is a solid, legal partnership agreement drawn up by a good small business attorney.  For details on how to proceed with a Partnership, I turned to two local attorneys, Rick Williams, Griffin Villa Williams, LLP and Scott Fintzen, Gaido & Fintzen, who are regular advisors to the IL SBDC at Waubonsee.

Williams concurs with the marriage analogy. "A Partnership is like a marriage - easy to get into, but hard to get out of."  He cautions that oral 'agreements' at the onset of the relationship often result in future disputes.  Williams advises Partners to form a corporation or limited liability company. "Partners acting in the scope of the partnership business can personally bind their other partners for partnership obligations. Your partner can expose you to a great deal of liability, which can be limited in an incorporated entity."

Fintzen agrees.  Fintzen also recommends having a candid conversation with potential partners: "This is not the time to be shy or polite. Tough or uncomfortable issues should be addressed, not avoided. Differing points of view need to be reconciled, or, if they cannot be reconciled, the partnership should be reconsidered."  To help you get that conversation started, Fintzen has compiled list of important issues facing business partners.

Partnerships should make sure they are adequately insured - a relatively small expense in the overall cost of starting a business.  "Partners are personally liable for judgments against the partnership, so if someone gets hurt on your business property, you may be liable for the claims," states Williams.

Both Williams and Fintzen stress the importance of developing a well researched business plan. Fintzen stresses that, "the business plan, along with discussions with your partners, will provide the information needed to have an informed conversation with your professional team about your business."  Williams recommends including an exit plan to address things like what will happen if your business fails, or if one partner wants to exit the business.

For help putting that business plan together, contact the IL SBDC at Waubonsee at (630) 906-4143 or sbdc@waubonsee.edu. 

Child Care Business Expo

Make Your Small Business BIG

Today small businesses have access to so many of the resources that have long been available only to larger companies. Low-cost technology is changing the playing field for small business by allowing them to have a more professional appearance and presence similar to big business. From business cards to social media options, check out these tips on how to operate in a BIG way regardless of the size of your actual business.

Illinois SBDC at Waubonsee Community College