If you search Google for information about business partnerships, it won’t take you long to find all kinds of horror stories about why you should never get into a partnership. But Ryan’s guest on this episode, Matthew Paulson is a partner in a number of ventures and believes that most of those nightmares happen because people don’t go into partnerships wisely or with the appropriate legal paperwork and agreements in place. This solo episode features Matthew’s take on partnerships, how you should evaluate the potential fit of a partnership opportunity, and what should go into a great partnership agreement.
You should think of a business partnership like a marriage.
You would likely never marry a person you had only heard about or had a general impression of, but didn’t know well. Matthew Paulson believes the same kind of logic should be applied to business partnerships. Think about it: in a partnership, you’re entering into a relationship where you will have to trust an individual with major decisions that directly impact your future: things like money, business agreements, resources, strategic decisions and long-term plans. It simply doesn’t make sense to get into that kind of relationship with someone you don’t already know well, enjoy being around, and trust implicitly. Listen to this episode to discover how Matt suggests you can approach partnership opportunities carefully and wisely.
What does a partnership provide that paid employees would not?
Many times, business partnerships are created because the people involved are the ones who have the ideas or resources that could potentially make the idea fly. But Matt Paulson doesn’t believe that’s a good enough reason to form an official partnership. In his mind, you need to consider what the partnership brings to the situation that hiring full-time employees couldn’t. If you can get clarity on that issue you may come to see that the equity and decision-making power a person is given in a partnership is not equal to the work they’d be doing – and you might rethink the possibilities of a partnership as a result. Matt has great insight into this issue, so be sure you listen to this episode of Freedom Fast Lane.
Why every partnership should be a “Hell, Yes!” opportunity.
There are many of us who jump into opportunities simply because they seem like a good idea, or the potential upside looks promising. But when it comes to business partnerships, that’s not enough. If you are willing to get into a business partnership you need to be willing to not only say, “Yes,” but to say, “Hell, yes!” In other words, the excitement you have about the opportunity needs to be the kind that will sustain you over the long, arduous climb to success that any business partnership will require. If you want to learn how you can know if a partnership opportunity is really that kind of situation, listen to this episode.
Why you need a partnership agreement and what should go into it.
No business partnership should ever be initiated without clear, legal terms spelled out on paper, signed by all partners. You may think it’s not needed, especially if you’re going into business with a long-time friend or a family member. But those are instances that especially need a clear delineation of who is responsible for what and what compensation, perks, and benefits each partner is to receive. The reason is simple: people forget or misremember things over time. A partnership agreement makes it clear what was agreed upon in the first place, leaving no room for the fuzzy recollections of the people involved. On this episode of Freedom Fast Lane, Matt Paulson outlines the specifics of what sorts of terms and points of clarity should to into a partnership agreement, so make sure you listen.
Outline Of This Great Episode
- [0:22] Matthew’s introduction to the issue of business partnerships.
- [2:35] What is a true business partnership?
- [5:32] Do you know, like, and trust the people you are considering partnership with?
- [7:45] What value does the partnership bring that paid employees could not?
- [12:32] Only get involved in partnerships you are extremely excited about.
- [15:00] Partnerships are seldom magic bullets that will make you more successful.
- [16:19] What goes into a good partnership agreement?
Action Steps From This Episode
FOR GETTING STARTED: If you are considering a partnership where each person has an equal responsibility and investment in the company, don’t be lax about how you structure it. Make everything clear, in writing so nobody is surprised or disappointed.
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