Mastering The Art Of Forging The Right Business Partnerships
by Morey Stettner
This article appeared in IBD (Investor's Business Daily) 
Monday Special, October 30, 2006

Business partners usually shake hands and enter into agreements with much fanfare. But the goodwill doesn't always last.

About 70% of business partnerships fail, says Dorene Lehavi, owner of Next Level Business and Professional Coaching in Los Angeles. The parties' initial enthusiasm wanes as personality clashes and strategic differences set in.

"You can work on a great business plan together and conduct plenty of market research," Lehavi said. "But if you ignore the relationship — the people involved and their needs — you can wind up in a troubled partnership."

Before signing a partnership agreement, spend lots of time in heart-to-heart conversation. Don't just discuss your business philosophies and chances for success. Dig deeper to get to know each other's fears, hopes and personal goals.

Lehavi advises potential partners to ask each other a series of searching questions to assess their level of compatibility. By giving honest answers, they can enter into a partnership with a better understanding of how they mesh. Examples of questions they should ask: How do you handle a crisis? Both parties should describe their experience fighting uphill battles and overcoming hardships. Because you may respond to a crisis differently from your partner, it's important to talk through your contrasting approaches.

What's your long-term vision for your business and your life? While personal goals can change, you want to get in the habit of providing full disclosure about your dreams and aspirations to your partner.

Lehavi coached two brothers who built a successful Internet business. But as their enterprise grew, they never discussed what mattered most to them over the long run.

"Eventually, one of them wanted to sell the business and retire while the other one wanted to keep building it to give to his children," she said. "The partnership dissolved because their visions were so different."

Spotting potential areas of friction early is key, Lehavi says.

When drafting the partnership agreement, Lehavi suggests including lots of details. Specify who will make decisions, how you will resolve conflicts, the roles of family members in the business and steps you'll both take should a major illness, divorce or other life-changing event occur.

"Avoid a boilerplate agreement," Lehavi said. "The best agreements deal with the two partners specifically. You cannot foresee the future, but you can plan for the unexpected."

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