Things to consider when starting a business with anyone other than the person that stares back at you in the mirror:
1. People change.
You and your partners will (not might WILL) change in some way given the new responsibilities of your business. Stress levels, staff issues, budgeting and all the other fun things that can drive business owners to distraction will play a part in the type of people you grow to become within your business. The saying nothing is constant but change is definitely applicable in a business and if you dont expect it from your partners (and yourself), watch out.
2. What do you do again?
Its all well and good to set up a business with the innate knowledge that everyone will work their butt off just as much as the next person, that all partners will put in equal hours and that everything will just be la-di-dah because thats what we agreed to. In my experience however, not having set job descriptions can be one of the major areas in which partnerships come undone. Take the time to plan this aspect of your business to the degree that everyone has a detailed job description which outlines who does what and who has responsibility over what areas.
3. Who decides what?
In an ideal world when theres a decision to be made within a business the partners put their heads together, take into consideration all appropriate information, and then presto, they all agree on one way forward. In reality, this may happen a lot of the time, but there are going to be occasions where you dont agree. What sort of a plan do you have in place for when there are two directions (or even three or more) and you have different people wanting to go down different paths?
4. Who is the one?
Might I suggest that you break up your business no matter how small it is now into divisions such as marketing, product, human resources etc? Work out amongst the partners who is the best fit to manage each department (it doesnt have to be an even split decide based on who is best qualified). From there, agree that discussions will be had about all large decisions. However, if there is dispute over direction, the final decision will be made by the head of that division. That failing decide amongst the group who is most qualified for an over arching CEO type role and have them as the final decision maker. Trust me, it may seem harsh now to appoint one person as the grand decision maker but it will solve so many problems in the long run. Note for the CEO: although you get the glory when things go right, remember your neck is also on the line if the decision you make goes pear shaped!
5. Friends and family.
Ill keep it short and sweet here, but just think long and hard about whether youre willing to jeopardise your relationship with your friend or family member by going into business with them. Ill talk more about the fun and games of employing family members later!
6. More on family.
If there are frustrations at work, or cracks in a partnership, the partner who goes home upset will naturally vent to their family. As we know, there are always two sides to any disagreement, but family usually only ever hear one side (and probably would still be very biased even if they heard both). Be prepared for the impact on a partnership that outside family members can have. The wife saying to the stressed husband I cant believe he doesnt put in the same hours as you or the husband saying to the dejected wife She just doesnt value your input! can have a huge unseen impact. In some ways, family input can be like a cheer squad for the breakdown of a partnership.
7. Get me out of here!
Before you go into business with anyone, I cannot stress more highly the vital need to have some sort of a contingency plan in place, in case the partnership doesnt work out. Who leaves, how it is decided, how the business is valued, how a pay out structure will be composed if needed etc. Working it out early can mean youll miss out on a lot of sleepless nights and a huge dose of drama. It is definitely worth it for the hour or so itll take to sort it out early!
As complicated as partnerships can be, setting up a business with people who possess complementary and opposing skill sets to you, has many great advantages. Just remember to protect yourself in the ways mentioned above.
Excerpted with permission from Kirsty Dunpheys new book Retired at 27, If I can do it anyone can.