Business Partnerships Part 1: The Pros and Cons

business partnerships

I am a huge fan of business partnerships. I have many. It has enabled me to develop stronger relationships, embody a spirit of service and encounter a superabundance of wisdom. But without patience and understanding, someone’s partnership can fail, even before it begins.

Consider this: One day, You and your best friend are out having a cup of coffee.

You both have been doing CrossFit for two years. You both have your CrossFit Level 1. You both have the skills and desires to bring the new definition of fitness to your community. An idea hits you: Let’s start a CrossFit Affiliate together.

Your Affiliate is born. You agree everything will go 50/50. The startup, the expenses, the responsibilities, the coaching and the hard-earned profits. You begin with one member, and then the rest follow. A year later, your facility is thriving.

But something else changes, too. You begin taking more of the responsibilities, doing more of the coaching and notice an attitude change in your partner. He/she is lacking effort, but wanting more. You begin to disagree on how to run the facility. You disagree on essential business decisions. The agreement you laid out is now on the brink of making drastic changes and for the worst.

This is a very common outcome when working with business partners. And if you do not have a clear and concise plan from the beginning, your ability to “hash it out” later on may prove to be a failure. During this two-part series, I will lay out some guidelines on how to develop successful relationships and turn them into powerful business partnerships.

Creating an Affiliate doesn’t require a huge amount of money to start. If the duties and responsibilities are not laid out, however, it can become a rigorous and frustrating process.

With a partner, the pros are many:

partner

 

 

 

 

 

  • You both share the cost of the startup.
  • You both can acquire a business loan together.
  • You both share the responsibilities and coaching hours of your Affiliate.
  • You both share mutual respect, support and motivation.
  • You both make decisions essential to business development.
  • You both have exceptional ideas to improve memberships and community awareness.
  • You both bring something different to your Affiliate: personality, coaching style, skills and education.

The cons just happen to be many, too:

no partner

 

 

 

 

 

  • You share the profits your business obtains.
  • You are both legally responsible for the duties and functions of the business.
  • Having total control of your business goes out the window. Decisions must be made together and disagreements can occur.
  • Multiple disagreements can cause friction in the business and can break down your community.
  • Disputes can end a friendship and also end in a buyout.

When wanting to start an Affiliate, consider these vital questions you should ask yourself before bringing on the partner you think you need:

money

 

 

 

 

 

  • Can you work well with others? Togetherness and dual decision-making is necessary for successful business partnerships. When you establish the answer to this first question, make sure you do the same to the potential partner.
  • Is your business partnership as good as a marriage? It involves dual decision-making, mutual respect, ongoing motivation, civil negotiation, steady compromise and constant communication.
  • Does your partner have the skill set and the same drive as you, or do they just have the money? If your partner brings nothing to the table other than money, your partnership will suffer quickly. Do you both have the same passion for helping, coaching and empowering others?
  • The most important of them all: Do you trust this person?

If you have known them for a long time, your discretion on whether to go into business with them is based solely on if you feel comfortable with them. If you just met or have only known each other for a year or two, the best way to find out about your potential business partner is research. Either way, you need to make sure that the business responsibilities and duties are lined out specifically from the beginning. This will include duties, how much capital is invested by each person, what percentage of the company is owned, how decisions are made and resolved, how profits are distributed, and a buy sell agreement. Acquiring a lawyer to draft up an agreement is not required but is highly recommended. That way you are both protected.

Business partnerships can be an amazing step into creating something truly special inside your Affiliate, but not without answering some questions first.

Jonathan Burgard

Jonathan Burgard is the founder and co-owner of True Glory CrossFit. Contact him at admin@trueglorycrossfit.com.