Code Brain | Ten Questions Before Starting a Business Partnership

For entrepreneurs, a business partner is the most active and valuable relationship you can have; choosing the right one is also among the most important decisions in starting a company. Working with a great partner is genuinely fun — you elevate each other, ride life's ups and downs together, and build a friendship that lasts. In short, it's worth the effort.

Many people compare business partnerships to marriage, but they're not the same — maintaining a partnership is actually harder. Research suggests that roughly 50–80% of partnerships fall apart within the first few years.

That said, successful business partnerships resemble marriage in one critical way: their impact is profound. Your key personal and professional relationships, your financial returns — they all hinge on this. And there's a good chance you'll spend more waking hours with your business partner than with a potential spouse.

Yet people — often friends — rush into partnerships without coolly analyzing what could go wrong. A hasty decision like that will likely lead to painful friction down the road. That's why it's crucial to be deliberate and intentional from the start. You can anticipate and inoculate yourself against future problems, or avoid a flawed partnership altogether.

To spare yourself unimaginable pain on the entrepreneurial journey, we've laid out ten questions to ask before partnering up.

01

Do we want the same things?

Money is usually a shared motivator, but the key discussion is about how much someone wants to earn, how badly they want it, and how money relates to other life goals (like work-life balance).

Partners may be at vastly different wealth levels. If two people start a company together and one is already financially independent, this venture might just be a side project for them. But the other person, lacking that security, will probably be betting everything on its success. The dynamic is tense from day one.

02

How hard are we going to work?

It's natural for two people to have different views on work intensity (hours, timing). In the excitement of exploring a potential partnership, it can feel awkward to ask: "So how many hours are we working each week? What about emails at night or on weekends? Do we work on vacation?" Drop the politeness. Reaching specific, concrete agreement on work intensity is essential. Equality doesn't mean fairness — differences in work habits can be balanced in other ways, such as compensation.

03

How do we evaluate contributions?

Take a clothing company: one partner handles design, the other manufacturing and sales. The company succeeds, yet both feel underappreciated, and the relationship is strained. "Without my designs," one says, "we'd have nothing." "If I hadn't made and sold the clothes," the other replies, "your brilliant designs would be worthless." Everyone overvalues their own contribution — it's human nature. Partners need to recognize that all contributions matter, and no one is dispensable.

04

How do we face hard decisions?

Running a business together inevitably means confronting tough choices. It's best to agree on a decision-making process before the moment arrives. Many founders divide decisions by domain — you call the shots on marketing, I have final say on hiring. That works. But it's critical to clarify: what happens when partners strongly disagree on a difficult, high-stakes decision?

05

How do we handle conflict?

Some people are fine with heated arguments; others find them frightening and destabilizing. Before the first serious blow-up, assess each other's conflict management styles.

Consider two partners at a consulting firm: one grew up in a household with unhealthy, frequent conflict, which terrified her as a child. As an adult, she wants disagreements to be calm, controlled, and respectful. Her partner, by contrast, assumed conflict naturally involves raised voices. They found middle ground by setting clear boundaries.

When something is non-negotiable, both sides need to acknowledge it, surface the issue early, rather than letting resentment fester.

06

What's the strategy?

Core business strategy may seem like a rational, analytical matter, yet it can still divide partners because people often interpret it differently. Good strategy requires hard choices — saying no to things some partners find exciting or even depend on. These issues may only surface later, making it all the more important to anticipate and address them upfront. A related question: how will we respond when the plan isn't working, or circumstances change?

07

Where's the inequality?

"Equal partners" is social nicety. The reality is that every partnership contains inherent inequalities: some substantive, like relative contributions; some interpersonal, like power gaps. The question is how to maintain trust and commitment despite them.

Try asking directly: "Are we really partners? ...Or is this something else?"

08

How do we split the rewards?

This is the thorniest issue. It touches on fairness and respect, and on the practical matter of putting food on the table. Family members will have opinions. And for most people, it's as sensitive a topic as politics, religion, or sex.

One key principle on profit-sharing: determine what matters more to us than money.

Some partners simply split everything evenly regardless of contribution, accepting inequality for the sake of the partnership. That's one approach.

09

How do we keep records?

This sounds minor, but documentation is critical. Two reasons: first, people may believe they've reached consensus on something, only to discover discrepancies when they write it down. Second, people forget, and different people remember the same event differently — which means there was no real agreement to begin with.

Some partners sign all important agreements electronically — say, on how to split expenses for a particular project.

Record and preserve what partners have agreed to, in a way everyone can easily revisit.

10

How do we exit?

All partnerships end, whether in celebration or tears. Best to think it through early: who gets what? Who owns what? What if only one or two partners want out? What happens to intellectual property, relationships, and other resources they brought in? What are the communication protocols or non-compete agreements for departing partners?

Clear agreements let partners part amicably when the time comes, avoiding protracted legal battles and broken friendships.

Now, go discuss these questions with your potential partner — then launch that thrilling venture.

Original: 10 Questions to Ask Before Entering a Business Partnership
Authors: Rebecca Zucker and Jonathan Becker
Link: https://hbr.org/2023/08/10-questions-to-ask-before-entering-a-business-partnership