Yesterday we talked about the Pros and Cons of structuring your business as a Partnership. Today I want to look at the ways you can divvy up your roles and responsibilites between each business partner.
First, I think it’s important to look at how much time and energy each business partner will be able to put into the business. Often times, people assume that 50/50 is a great split and it makes complete sense to structure it that way. Truth of the matter is that one Partner may end up not being as passionate about the business, they might be spread too thin and involved in 5 other businesses, or just aren’t able to hold up to their 50% of the deal for a variety of reasons. So, I think it’s important to have an honest conversation as business partners to determine first off how much of the 100% of the business pie each person can handle and will be responsible for. Please know, that you can absolutely change the percentage of the ownership – if you started out as a 50/50 Partnership and 5 years down the road you determine that you’re doing the majority of the workload, responsible for most of the profit, etc. then you need to consider increasing your percentage of ownership in the business.
Second, it’s so important to look at each person’s strengths to determine which job responsibilities each business partner will own. Without clear ownership of duties, there can be much confusion, redundancy in work, and ultimately will affect productivity/sales. So, I recommend creating an organization chart that you can use to map out each Partner’s functions in the business. Let’s say John and Mark are business partners and own XYZ Cake Company. John is super outgoing, naturally connects with other wedding pros and loves networking. Mark is more of a behind the scenes type of guy, enjoying looking at the numbers, training personnel, and focusing on the strategic direction of the company. John should be responsible for areas such as Public Relations, Sales and Marketing, and Social Media. Mark should be responsible for Finances, Operations, and the overall Vision/Mission/Strategy of the Company. If they don’t define these roles, how will they know who is going to respond to the inquiry that just called in, or who will be responsible for submitting weddings to be published?
Having set responsibilites outlined will not only save you headaches, but will help you to be more productive and achieve your goals at the end of the day. There are some great tools available to help you create an “Organizational Chart” for your Company, even if there are just two of you. You can use basic programs like Word or PowerPoint to create Org Charts, Google Draw, etc. Or, if you want to invest a little bit, there are programs like Org Plus or Smart Draw that can help you to easily create an Org Chart with their online tools.
Also, if you’d like to consult with someone on the best way to structure your business and outline the roles and responsibilities within your Company, I have Organizational Design expertise from my prior career in Human Resources, and would love to chat with you about how I could help.
Check back tomorrow for examples of successful partnerships!