A business plan is crucial to a partnership relationship…
and in fact, if you don’t have a detailed one, you can’t consider your commitment to the business and the partnership on firm ground yet. The reason is that the business plan will include very crucial details about finance, risk, and the day-to-day processes of managing and marketing the business. It will also include in detail who does what. If these elements are not fully discussed and in writing, then the commitment each partner makes will not be to something that is firm and clearly understood.
Many people avoid a business plan because they think it is too difficult to write. In fact, a business plan is not written in stone. It should be a fluid document that is readily reviewed and changed. However, you have to start somewhere. Discussions between partners, with and without the help of experts are necessary. Plans can be simple, to the point, covering the various areas or they can be much more elaborate. One of the necessities of writing a business plan beyond defining the business for yourselves is to acquire funding. A funder will require certain information, such as product information and a marketing study to know that it is a viable idea.
A business plan should include:
- Who is this company?
- What are its principles?
- How long has it been in existence or is it a startup?
- What is the product or service?
- Who is the target market?
- How will you or do you reach that market?
- Who is the competition?
- How does or will it compete?
- How will you produce your product or execute your service?
- How will your management team be constructed and function
- What are the business’s financial projections?
- What are the risks in this business and what plans do you have to mitigate them?
- If the purpose of this plan is to acquire financing, explain the details of what you are looking for.
- If you haven’t done it yet, start simply. Write the basics and continue to discuss the details. You may even want to talk into a recording device that you have transcribed or certainly write your thoughts as they come up.
The partnership agreement is another document you should have, but contrary to needing the business plan immediately, the agreement you can take more time with. You don’t want a boilerplate it. The agreement is far more important to
talk through all the details including a variety of exit strategies and “what if” scenarios before you write it. It should reflect the uniqueness of each of you, as well as, your vision of the business.
- If you have not written a business plan, it’s time NOW.
- If you and your partner have written a business plan it’s a good thing to review regularly.
- How does the day-to-day function match up with what is written?
- What changes would either or both of you like to make?
- How is your personal life affecting the way you work or your commitment, financial or time-wise to the business?
- What about your job description that is making you happy and what is making you unhappy?
- Do you want an adjustment?
- What changes do you foresee the market requiring?
If you have a partnership agreement, take another look at it. If you don’t have one yet, don’t rush. Begin to talk about the difficult decisions, such as how to handle disagreements, as many exit strategies as you can envision, and every “what if” scenario you can think of.
Something to consider…,
If you are still feeling a bit lost, don’t worry. Over my career, I have developed the Business Partnership Agreement Template, or BPAT for short. It’s a great resource for any partnership that is in the development stage but can also be leveraged to fix issues that weren’t addressed when your partnership began. I developed it to provide you with a foundation for the success of your partnership. Many times if you go to a lawyer to develop an agreement first they will develop one that is aimed at the breakup of a partnership. Whereas my BPAT plus the bonus What-Ifs Scenario Handbook will help your partnership get on solid footing so when problems arise, you’ll be able to navigate them much more efficiently and amicably.