Assessing the Pros and Cons of Partnerships

Taking on a partner is like getting married, so if you don't trust a person as much as you trust your spouse, you probably shouldn't become partners. Great partnerships are rare, but when they work they enable both parties to achieve more than they could achieve individually. All too often, however, a partner runs off with the cash, fails to pay the contractors, cashes checks made out to the water company or building supply store and pockets the money, files an insurance claim to collect for damages without your knowledge, or figures out some other way to pick your pocket.

If you're considering partnering up with someone, think about having the person work for you for a fee. That removes one possible area of conflict, and if the relationship doesn't work out, you're only out the money you paid the person up to this point.

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Thriving partnerships always require constant attention and nurturing. To establish a productive partnership, take these seven steps:

1. Pick energetic, talent, and determined partners whose personalities and talents complement yours.

2. Address financial concerns up front. Don't partner with someone who has little or no income, a poor credit rating, lousy cash flow, or is in a precarious financial position. Each of you should fully disclose up front your financial situation and how the money is to be handled.

3. Build a common vision with shared goals. You both need to be on the same page.

4. Communicate, communicate, communicate. Communications should be frequent, open, and honest.

5. Promise only what you can deliver, and then deliver on those promises. This builds trust.

6. Share decisions, work, and rewards equally.

7. Be prepared to compromise. "My way or the highway" doesn't always work. Try on your partner's ideas and approach every once in awhile to see how it works.

If you partner with someone, have your attorney write up a contract that details the responsibilities of each party and how profits are to be divided. A partnership that's based only on a handshake often ends up in a bitter battle.

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