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3 Reasons Why You Don’t Want to Rush Into a Business Partnership

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I’m sure you’ve heard the success stories of people going into business together. Steve Jobs and Steve Wozniak decided to go into business together and created the $2 TRILLION company that we know as Apple.

Microsoft, McDonalds, Google, these are all extraordinary examples of business partnerships gone right.

But partnerships like this don’t happen to everyone. In some cases, people jump into partnerships hoping for a miracle. But just like in any other relationship, if you rush it, you aren’t going to last. 

So in this article, I will outline the 3 reasons you DON’T want to rush into a business partnership.

1. You Don’t Know Them

Rushing into a partnership is like a Vegas marriage. 

You don’t know each other well, there were probably drinks involved, and you’ll quickly end up separated. 

Chances are the reason you’re rushing this is because you just met. Maybe it was at an event or some business seminar and you 2 really hit it off. Both of you think it’s a good idea to go into business together and start manufacturing Luxury Hammocks. 

The biggest issue with this is that you don’t know them, and no one would buy luxury hammocks. Don’t make the mistake of going into business with someone you don’t know well. 

Now I’m all for meeting new people and exchanging emails, but hopping into a business partnership like that is doomed for failure. 

Before agreeing to go into business with someone, you have to know these 3 things about them:

  1. Their motives
  2. Their skills
  3. Their values 

It’s important to know their motives in wanting to be your business partner. Why do they want to work with you?

Is it because they think you have good ideas? Or are they looking to take advantage of your hard work ethic so they don’t have to do anything? Asking “why” will let you know if their motives are for both of your benefits, not just their own. 

Before becoming business partners, you should learn what skills they have. The Los Angeles Lakers wouldn’t draft someone without scouting them. So why would you go into business with someone who you haven’t learned more about?

Ask them what their values are. Your values attract the kind of people that you should partner with. If you’re a hard worker, you’ll attract other hard workers. If you value efficiency, you’ll draw in others with similar values. 

These things are important things to know about someone before going into business with them. They act like requirements to be your partner. If you ask them those questions and you don’t like any of their answers, swipe left. 

In other words, don’t rush in if you don’t know them. This will only lead to complications and disagreements.

2. You Might Have Different Goals 

The second reason you don’t want to rush into a business partnership is because you might have different goals. Before going into business with someone, you HAVE to make sure your goals are similar. 

This is extremely important. Both parties have to know the other’s goals in partnering up. If your paths aren’t headed to the same destination, there are going to be a lot of disagreements. 

It’s like going on a roadtrip with a friend in one of those old driver’s test cars with the 2 steering wheels. Your friend wants to go to Miami, but you want to go to Portland. There’s no way that trip is going to be fun, safe, or quiet. 

The same is true in a business partnership. If your final destinations aren’t the same, neither of you are going to get there. It would be a lose – lose. 

So before you decide to start working together, have “the talk”. Ask them what their goals are to find out if they’re consistent with yours. 

If they are, great. Keep getting to know them to see if becoming partners would work out. If not, don’t go into business with them. Sometimes the people that don’t make the cut perform better as a friend or someone you know casually.

3. You Don’t Need One

The third reason you don’t want to rush a business partnership is that you don’t need oneThis may seem a bit surprising. What’s the point in me giving you these tips and questions to make sure a business partner is right for you?

These questions are only to ask the other person. What you have to ask yourself is: Do I really need a partner?

I believe that you’re a very capable person and don’t really need to deal with the weight of a partner. It’s like in school when your teacher assigns a group project and you think it’s a good idea to partner with your best bud. 

It’s a good thought at first, but somewhere between their useless comments and procrastination you realize you could’ve done it by yourself. That’s what I want you to realize.  

And plus, money can buy just about everything, and most of the skills that you lack, you can hire someone for. 

“Why pay someone money to do something a partner could do for free?”

You do have a point. But think about what would happen if things go south in both situations. 

Let’s say you hire someone to help you grow your online and media presence. But over time you start losing followers and your audience begins to shrink. So you fire the person that wasn’t doing their job and look for someone else. 

Simple enough, it was a clean break. 

But now let’s say you have a business partner who’s supposed to help grow your online presence. But he too starts to lose followers and influence. So you confront them, tell them that they suck, and you have a huge falling out. Now they want to leave.

But it’s not like you can just fire them. Since they’re your business partner, you have to split everything 2 ways. But how are you going to split the business in half? The mailing list? The trademark?

That example is a bit extreme, but you get what I’m trying to say. In some cases hiring someone is a better choice than partnering. And sometimes you don’t even need a second person because you can do it all yourself. 

So that’s the 3 reasons you DON’T want to rush into a business partnership

If you rush it, you’re not taking the time to see if they’re a good fit based on their values, motives, or skills. 

And on top of that, you may not know what they’re driven by. Having similar goals is crucial to a successful business partnership, because you’re both working toward the same objective. 

But it’s also important to realize that sometimes a business partner isn’t what you need. Whether it’s because hiring someone else would be simpler or you can do everything yourself.

Partnerships have the potential to be incredibly useful and enjoyable, but only if you put in the time to get to that point. I recommend that before you make any rash decisions, you read back over this and see if it really is the smart thing to do.

Michael Blank is an entrepreneur through and through and passionate about helping people become financially free with real estate investing. He’s the author of the Amazon bestseller “Financial Freedom with Real Estate Investing” and host of the popular Financial Freedom with Real Estate Podcast. He's helped investors purchase over 9,500 units valued at $445M through his training programs. As CEO of Nighthawk Equity, he controls over $200M in multifamily real estate.

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Entrepreneurs

How Entrepreneurs Are Harnessing LLCs to Launch Successful Startups

LLCs have unique advantages for starting up and growing a successful business

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why you should set up an LLC

In my entrepreneurial journey, I’ve learned that LLCs have unique advantages for starting up and growing a successful business. But, before delving into the advantages, it’s essential to grasp the fundamentals of what an LLC is and how it operates. 

What is an LLC?

An LLC is a hybrid business entity that combines the liability protection of a corporation with the pass-through taxation of a partnership or sole proprietorship. This unique blend provides entrepreneurs with the best of both worlds: personal asset protection and simplified taxation.

One of the most significant advantages of an LLC is its limited liability feature. This means that as the owner, my personal assets are shielded from any liabilities or debts incurred by the business.

In the event of lawsuits or financial obligations, only the assets of the LLC are at risk, offering me peace of mind and protecting my personal wealth.

Advantages of Forming an LLC

Flexibility in Management and Structure

Another aspect of the LLC that appealed to me was its flexibility in management and structure. Unlike corporations, which have rigid hierarchies and formalities, LLCs allow for a more relaxed approach to governance. As the founder, I have the freedom to structure the company in a way that suits the needs and goals of my startup.

For instance, LLCs can choose to be managed by their members (owners) or appoint a manager to oversee operations. This flexibility enables me to maintain full control of the business or delegate management responsibilities to trusted individuals while retaining ownership.

Additionally, LLCs are not bound by strict meeting requirements or extensive record-keeping obligations, reducing administrative burdens and allowing me to focus on building and growing the business.

Pass-Through Taxation and Financial Efficiency

One of the most attractive features of an LLC, particularly for startups, is its pass-through taxation. Unlike corporations, which are subject to double taxation (taxation at both the corporate and individual levels), LLCs pass profits and losses directly to their members’ personal tax returns.

This tax efficiency not only simplifies the filing process but also allows for greater flexibility in managing cash flow and reinvesting profits back into the business. As an entrepreneur, minimizing tax liabilities and maximizing financial efficiency are critical components of long-term success, and the pass-through taxation feature of an LLC aligns perfectly with these objectives.

Enhanced Credibility and Professionalism

Establishing an LLC can also enhance the credibility and professionalism of a startup. Unlike sole proprietorships or general partnerships, which may be perceived as informal or less legitimate, an LLC provides a formal business structure that instills confidence in customers, investors, and partners.

By operating under the umbrella of an LLC, I can present my startup as a reputable and established entity, which can open doors to opportunities such as securing financing, attracting top talent, and forging strategic partnerships.

This enhanced credibility can be a significant advantage, particularly in competitive industries or when seeking to differentiate my startup in the market.

Protection of Intellectual Property and Brand Assets

For startups built around innovative ideas or unique intellectual property, protecting these assets is paramount. An LLC offers an additional layer of protection for intellectual property and brand assets, safeguarding them from infringement or unauthorized use.

By registering trademarks, copyrights, or patents under the name of the LLC, I can establish legal ownership and enforce my rights more effectively in the event of disputes or infringement claims. This protection not only preserves the value of my intellectual property but also enhances the overall stability and longevity of the startup.

Steps to Form an LLC

Let us now look at the general steps to form an LLC for your business:

Step 1: Choose a Name for Your LLC

Selecting a unique and distinguishable name is the first step in forming an LLC. Ensure that the name you choose complies with the rules set by your state’s LLC division. Typically, the name must end with “Limited Liability Company,” “LLC,” or an abbreviation of these terms.

Additionally, the name should not infringe on the trademarks of existing businesses.

Step 2: Designate a Registered Agent

A registered agent is an individual or entity appointed to receive legal documents, such as lawsuits or subpoenas, on behalf of the LLC. The registered agent must have a physical address within the state where the LLC is formed.

For instance, if you are forming an LLC in Texas, ensure that your registered agent has a physical address in Texas.

This role is crucial for ensuring that the LLC remains compliant with legal requirements and maintains good standing.

Step 3: File Articles of Organization

The Articles of Organization, also known as a Certificate of Formation or Certificate of Organization in some states, is a document that formally establishes the LLC. You’ll need to submit this document to the appropriate state agency, usually the Secretary of State or Division of Corporations.

The articles typically include basic information such as the LLC’s name, address, registered agent details, and the purpose of the business.

Step 4: Create an Operating Agreement

While not always a legal requirement, drafting an operating agreement is highly recommended for LLCs. This document outlines the ownership structure, management roles, voting rights, profit-sharing arrangements, and other important aspects of the LLC’s operations.

Even if you’re the sole owner of the LLC, having an operating agreement in place can help clarify expectations and prevent disputes in the future.

Step 5: Obtain an Employer Identification Number (EIN)

An Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to identify your LLC for tax purposes.

Even if your LLC doesn’t have employees, obtaining an EIN is necessary for opening a business bank account, filing taxes, and conducting other financial transactions.

Step 6: Obtain Necessary Permits and Licenses

Depending on the nature of your business and its location, you may need to obtain various permits, licenses, or certifications to operate legally. These requirements can vary widely from one industry and jurisdiction to another. Common examples include business licenses, zoning permits, health permits, and professional licenses.

In my entrepreneurial journey, the decision to establish my startups as LLCs has been instrumental in mitigating risks, optimizing financial performance, and positioning my ventures for long-term success.

By harnessing the advantages of the LLC structure, I’ve been able to navigate the complexities of entrepreneurship with confidence and resilience, laying the groundwork for a bright and prosperous future.

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Entrepreneurs

Build a Strong IT Team with These Smart Hiring Tips

Without dedicated IT staff, your company may not be able to function as efficiently or effectively

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Hiring tips for tech industry

The role of IT staff in your company is not only essential but also ever-evolving. As your business grows, so does the need for qualified IT staff and more robust recruiting solutions.

After all, from maintaining and troubleshooting the computer systems that keep your business running smoothly, IT staff also help employees stay connected and productive by providing technical support at all times. (more…)

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5 Important Legal Tips Every Entrepreneur Should Know

With a firm commitment to legal knowledge, you pave the way to grow your business sustainably

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legal tips for entrepreneurs

Embarking on the entrepreneurial path is a courageous venture that calls for a diverse skill set to achieve enduring success.

While creativity, drive, and strategic vision are paramount, integrating legal insight into your entrepreneurial toolkit can be a game-changer.

This comprehensive guide delves deeper into the five critical steps that can empower you to navigate the intricate legal landscape and propel your venture toward prosperity. (more…)

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6 Hacks to Boost Your Productivity as a Business Owner

To improve how much you get done each day, it’s smart to establish routines and use careful planning

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Entrepreneurs are always looking for ways to get more done with the time and resources they have. Business owners can use clever productivity tricks to break these limits and make the most of their projects. (more…)

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