If it's a friend, acquaintance, or stranger, you need to cover all your bases before entering into a binding agreement. Inc.com recommends asking these questions:
- What will your role in the business be, and what do you expect mine to be? Having co-CEO's can be difficult so consider having one person in charge.
- How will we split up ownership, how will we divide profits and losses, and how will we each be paid? Some experts suggest avoiding a 50/50 split. If you are equal partners, be careful about giving ownership to an employee--it effectively gives the employee the swing vote in any partners' dispute.
- How are we going to make decisions?
- What are your values? Will you outsource? Will you employ illegal immigrants? These types of questions are important.
- How do you prefer to communicate? Email, verbal, written??
- What kind of hours will we keep?
- What's you spending style and credit rating? Lenders are likely to check credit history of both business partners.
- Where do you want the business to be in 5, 10, 20 years? Chart out a growth plan and possible exit strategies if it doesn't work.
- Can I have references? You need to know their reputation and personality. Check with vendors, check with Google, meet the spouse, meet the family, meet the friends.
- Now, can you sign this agreement?
Business partnership is a very serious commitment and could be disastrous if not approached correctly. Good Luck!
