As I was finishing up massage school at the end of 2016, my friend Bob suggested we rent a space together. I was planning to start my own business while he still had a full-time job and wanted to offer massage on the side. It made sense financially to rent a space together. But the idea gave me pause for two reasons: 1) I know myself pretty well and sharing just isn’t one of my strengths; and 2) Bob was my friend and I wanted to keep it that way. Given those two things, could sharing space possibly work?
Doing Business Together
You and your friend get along great and your skills complement each other. So, when you have a great business idea, it only makes sense to form a business together, right? Maybe.
“The mere exercise of developing a partnership agreement will illuminate the unspoken fears and foibles that usually stay hidden until things get fractured. The process will also bring forth the beautiful synergies and intentions that make the union so potentially rewarding.” – Danielle Laporte, The Firestarter Sessions, at p. 284 (Harmony Books 2012).
Not So Fast
While my friend Bob and I weren’t planning to form a business together, sharing space would impact both of our businesses and our friendship. I suggested we sit down and talk about the idea first. I wanted to know what kind of space he was looking for and how he wanted to decorate it because one space needed to be able to reflect both of us. Then there was how much we were willing to pay in rent and how to split it, as well as what kind of schedule we’d each keep. Once talked about it and found we had a similar vision, we began looking for a space that fit that vision.
“You’re laying the groundwork here for how you will continue to make important decisions, manage change, and respond to tough times together.” – Id.
Forming a Business Partnership
Even if you and your friend don’t choose to create a formal partnership by registering with the Iowa Secretary of State, you may still be treated like a partnership in the eyes of the law. That means you could both be liable for the other’s actions if you’re sued, and without a formal structure, you personal assets could be vulnerable. Not to mention the detriment to your friendship if your business doesn’t work out or if it’s fantastically successful but not following the vision of one of the original partners. When all is said and done, will your friendship remain?
“If you can’t face your present-day fears directly, then you’re ill-prepared for harsh realities. And that’s the prickly, uncomfortable work that needs to be done when cocreating agreements.” – Id.
Put it in Writing
A strong partnership requires a written partnership agreement. That begins with a discussion between the two of you about the division of responsibility, shares of the business, legal rights to anything you create, and what happens if one of you wants to leave the partnership or dies. Once you’ve talked through these details, which admittedly isn’t easy, then you can put them into writing.
Once Bob and I found a space we both liked, we sat down again to discuss the details. We negotiated how much we’d pay and the schedule we each wanted. We talked about how we wanted to decorate it and who’s equipment we’d use since we both had massage tables and Thai mats. This required give and take by both of us.
After the discussions, I wrote up a simple agreement that we both read and signed. It reflected all the things we’d talked about. It was also a good tool when one of us didn’t remember something because that’s part of what happens with verbal agreements – people recall details incorrectly or don’t remember the whole thing. That’s why you want to put your partnership agreement in writing. I’m happy to say that when our lease was up, and I decided to close my massage practice to focus on my law practice, we were, and still are, friends.
Our agreement was a simple one, and I’m an attorney. You may want to consult with an attorney as well about your partnership agreement because there may be issues or complications you’re not aware of. Then you can focus on the joy of doing business with your friend!
“If you can make it through the agreement-building process, you clear the runway to really soar.” – Id.
If you have any questions about forming a partnership or creating a partnership agreement, please contact me at 515.238.483 or email@example.com.