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• Crafting an Effective Partner Business Plan: Essential Elements for Success

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Partner Business Plans: Key Elements

• The Crucial Role of Business Plans in Law Firm Partner Success
• Maximize Portables in Your Business Plan in Order to Maximize Interest in You

The Importance of a Great Business Plan

Professional Goals For Partner Status

Making an evaluation of your existing practice, describing your vision as a partner, creating a strategy for growth.

• A partner's fit culturally
• The viability of a partner's practice for the long-term
• A partner's record of excellent client service to long-term clients and producing business
• A partner's history of consistently increasing collections
• A partner's practice fit in connection with the firm's strategic plan for expansion
• Whether a partner's practice area is one that is targeted for growth
• Whether the partner brings portable business and/or specific expertise needed in a particular practice area
• The opportunities the partner would bring for business development and significant cross-selling were the partner to join the firm
• Whether the partner's historical information is reflective of consistent productivity
• Whether the partner's client base fits within the firm's client structure
• Any potential conflicts that would preclude the firm from hiring the partner
• A partner's current compensation and compensation expectation
• A partner's potential contribution to the firm's bottom line/profitability
• A partner's fit within the firm's current attorney roster
• A partner's reason for leaving his or her current firm (voluntary/mutual arrangement) and whether the partner would be a problem
• Creative: Serve as a marketing piece on the partner and enable the firm to assess the partner's business potential. It should also provide an outlet to the partner to step out of the resume format and chart his or her previous performance and future prospects for business in a creative format.  
• Illustrative: Illustrate to a firm that the partner is thinking about his or her practice as a business and set forth his or her plan for the future.  
• Persuasive: Persuade the firm to hire the partner.  
• Historical: Chart a historical record of the partner's history of creating business opportunities and his or her ability to develop and foster client relationships over an extended period of time.  
• Demonstrative: Demonstrate a partner's business-development skills, initiative, and ability to contribute not only to his or her own success but also to the success of his or her colleagues through cross-selling efforts. It should also demonstrate ways a partner can contribute to a firm's financial bottom line, enhance its practice-group development, and ultimately bring added value to the team.  
• Prophetic: Prophesy what the partner believes he or she will be able to accomplish in his or her practice and for the firm in the short and long term.  
• Preparatory: Prepare the partner for the interviewing process.

Introduction

• Provide a narrative including professional history, practice overview, and a description of areas of expertise. This section may highlight briefly particular areas of expertise that the firm does not currently have.
• Describe the partner's role historically as a business developer.
• Briefly touch upon why the partner believes he or she would be a good fit for a particular firm.

Market Research/Analysis

• Give analysis of local need for services in partner's practice area.
• Describe local competition/other law firms with similar practices.
• Give overview of need in local market for partners with his or her expertise.
• Describe why partner believes firm provides the best platform in the marketplace for his or her particular practice area.

Current Client Base

• Describe current portable clients (use generic or specific).
• Describe key industries serviced.
• Discuss other partners' clients partner is servicing.

Additional Contacts to Develop

• Discuss contacts not yet tapped.
• Given market analysis, project possible targets in local, regional, national, or international markets.
• Discuss possible expansion of business from current client base.

Cross-Selling Opportunities

• Describe cross-selling opportunities with current clients.
• Describe cross-selling opportunities with known key clients of prospective firm.
• Discuss other practice areas at current firm to which partner is delegating work.
• Discuss services your clients are requesting that you cannot currently service at your firm and could otherwise capture at the new firm .

Other Business-Development Sources

• Describe additional business contacts you are pursuing or plan to pursue
• Speeches, publications
• Community organizations
• Bar associations
• Internal marketing initiatives
• Client seminars/newsletters

Long-Term Strategy Goals and Targets

• Set targets for expansion of practice in terms of collections, attorneys, and clients/industries.
• Consider possibility of local to regional to national growth patterns.
• Consider growth in other key competencies which may be affected by partner's long-term success.
• Discuss long-term strategies in connection with firm's overall strategic plan and practice-group development plans.

Historical Collections, Billing Rates, and Billable Hours

• If a partner with a lower billing rate structure, chart the anticipated rate increases by portable client or anticipated timeline for rate increases to current clients. Discuss any alternative billing arrangements you currently have in place with clients.
• Include three-year client collections history by client (as originating attorney and as billing attorney on other attorneys' matters). Include projection for current fiscal year.
• Include three-year billing rate history.
• Include three-year historical compensation history (including bonus information).
• Include three-year billable hour history.
• Note pending projects contributing to future collections.
• Include a summary of anticipated collection projections for the next three to five years.
• Business-development budget
• Time commitments from partners in other practice areas for cross-selling purposes
• Key staff needed (secretary, paralegals, etc.)
• Foreign-language skill requirements
• Travel expenses
• Marketing materials, presentations, etc.

Creative Conclusion

• Recap key points in plan, added value partner brings, and reasons he or she would be a good fit.
• Emphasize flexibility of plan and eagerness and willingness to discuss and modify in accordance with firm's plans and objectives.
• See 30 Ways to Generate Business as an Attorney for more information.

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Business Plan for Partnership Firm

A business plan for partnership firm is recommended for anyone entering into a business partnership. 3 min read updated on February 01, 2023

Updated November 2, 2020: 

A business plan for a partnership firm is recommended for anyone entering into a business partnership. A business partnership is two or more people working together to run a business. Each person takes on equal risks and rewards that come from the business. A proper business plan is ideal for handling current and future business decisions.

Steps For Planning a Business Partnership

• Write a mission statement to clearly state the direction and goals the business plans to take. By writing a mission statement, the partners agree to the company's direction now and in the future.
• Develop a reimbursement plan for the costs and investments incurred during startup. The amount of money provided for the startup is not always equal. Therefore, it is beneficial to make a plan that takes this into account with repayment and returns on investment. Avoiding arguments over the value of the startup amount versus levels of sweat equity will be removed with a reimbursement plan.
• Create a method to resolve partner disputes. If an odd number of members are part of the partnership, you can choose to vote democratically. In the case of two partners, the partners may split areas of the business having the final say. For example, one person can make final decisions on marketing and sales planning, while the other person makes final decisions on financial planning.
• Appoint an outside panel of advisors, or ombudsman , to resolve any internal disputes. Trusted experts should always be used to avoid ruining the partner relationship.
• Divide all the responsibilities of the partners related to labor and management and assign the amount of compensation they will receive. The compensation is not always equal based on the workload the partner takes on.
• Request that outside experts review the partnership agreement for any legal or accounting mistakes. The experts may be able to point out unknown problems that exist in the agreement. This review should take place before the partnership begins business operations.

Partnership Deed

A partnership deed and partnership agreement are the same, but the partnership deed is in writing . A partnership agreement can exist solely through verbal communications or actions. A partnership deed is recommended for businesses as it clearly defines the terms of the partnership.

The partnership deed helps prove the agreed-upon terms if there are any conflicts. Without a deed, the rules to settle disputes will fall to the state laws where the partnership exists. This creates another issue where one partner may file suit to benefit from the existing laws. Legal action can be avoided with a partnership deed that lists all details of the business that the partners agreed to when they began the business.

Partner Business Plans

When legal firms are looking to add a new partner, a well-written business plan that shows the new partners' intent to grow the business will make them stand out from the rest of the applicants. The business plan should exceed the expectations of the firm.

The key elements of the business plan are:

• Create an introduction that details your professional history, areas of expertise, and why you are the right fit for the firm.
• Provide market research and analysis of the needs of the local area, what competition exists, and why the firm offers the best way to reach this marketplace.
• Describe your current client base, prospective clients, and untapped areas you'd like to reach.
• Include any cross-selling opportunities that exist with current and prospective clients.
• Share ways you can develop business sources including publications, speeches, client seminars, newsletters, and similar.
• Explain your long-term strategy to meet the goals and targets that will benefit the firm.
• Show a history of collections, billing rates, and billable hours and projections for the current year, three-years, and five-years.
• Time the partners must invest.
• Key staff will be needed (paralegals, secretaries, etc.)
• Travel expenses.
• Marketing materials,
• Presentations.
• Foreign language skill requirements.

End with a conclusion that is creative recaps the important points in the plan, what value will be added to the firm, and why you are the best fit for the firm.

If you need help with a business plan for a partnership firm, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

Hire the top business lawyers and save up to 60% on legal fees

Content Approved by UpCounsel

• Limited Partnership Rules: Everything You Need To Know
• Purpose of Partnership: Everything You Need To Know
• Authority of Partners in Partnership: What You Need to Know
• Partnership Agreement Between Company and Individual
• Limited Company Partnership Agreement
• How to Make a Partnership Agreement Legally Binding?
• Contract for Business Partners
• Disadvantages of Partnership
• General Partnership
• Partnership and Company

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• Building Your Business
• Becoming an Owner
• Business Types

How To Build a Winning Business Partnership

Darrell Zahorsky is an expert in search engine optimization (SEO) and marketing. He has worked for companies and clients such as Blackberry, ADP, and Subway.

Have the Same Vision

• Define Roles

Choose the Right Structure

Anticipate disputes, spell out financial responsibilities.

• Plan for How to Get Out

Hold Partner Meetings

Revisit the agreement as you grow, the partnership agreement, frequently asked questions. (faqs).

Dan Dalton / Getty Images

Partnerships are a simple way for two or more people to own a business together. There are several types of partnerships that differ in terms of who is liable for debts and lawsuits. You may want to form a partnership to test a business idea before committing to a more formal business structure.

There are quite a few issues you should address with your prospective partner before forming a partnership. Attend to these issues before you start, and you have a better chance of a successful venture.

Key Takeaways

• A partnership is a business structure that involve two or more people who are in business together.
• A successful partnership starts with partners who have the same vision for the business.
• As you create your partnership you should define roles, spell out financial contributions and pay, decide what happens when you have disputes, and discuss what happens when one or all parties want to end the partnership.
• Continue to revisit your partnership agreement as your business grows.

For a partnership to be successful, all parties involved should agree on the same strategic direction for the company. If one partner wants to build a well-known national chain of retail outlets and the other partner only cares about earning a decent living, the business is destined to fail. Set a clear, agreed-upon course for the business that meets the needs of both partners.

Define Business Roles and Responsibilities

A winning business partnership capitalizes on the strengths and skills of each partner. Divide business roles according to each individual's strengths. For example, if one partner is strong in marketing, operations, and finance and the other partner excels in sales, human resources and leadership then split tasks accordingly.

Binding agreement authority is the ability to enter into contracts with other entities. You might consider deciding if any partner has this authority, and in what scope. You and your business partner could split this authority based on the responsibilities you each take on.

If your partner is responsible for procurement, they could enter a contract with a supplier without needing to confer with you. By agreeing who can make these kinds of decisions, you mitigate the risk of conflicts down the road.

The structure you choose for your business will dictate how you and your partner pay taxes for the business. Limited liability companies and general partnerships have different liabilities and tax responsibilities.

Avoid the 50-50 Split

It may seem logical and fair to equally split decision making. However, this kind of split can impair decisions. Instead of a stalemate when you can't come to a compromise, consider developing a way to overcome differences.

If this is not possible, then consider using an outside source to weigh in on big-ticket disagreements. You may not want this source to have final decision ability, but see if they will analyze the situation and give you their opinion for a course of action. If needed, get more than one opinion.

There will be disagreements between partners. Not many pairs of people can agree 100% of the time. You should consider how you are going to handle disputes between each other, with employees, suppliers, customers or any other stakeholders.

One way to deal with this is to include a mandatory arbitration clause in your partnership agreement and the contracts you make with other entities. Arbitration is the use of an outside party to determine the outcome of disagreements and disputes.

Arbitration is a legally recognized method of dispute resolution. Binding arbitration means that all parties involved agree to abide by the decision of the arbitrator.

You should decide with your partner how much each of you is going to contribute to setting up your business or partnership. If you are both already operating, the costs may not be as high as if you both needed to start out.

Everyone has their own limit for tolerating risk. Financial risk can be more stressful than physical risk because it affects much more than your own safety. You should discuss with your partner how much financial risk you both can tolerate, and set limits.

An example of risk could be the method that you choose to finance your business. There is generally more risk involved with debt financing than with equity financing (using loans to finance instead of issuing shares, venture capitalists, etc.).

You may not have much of a choice at first how you finance your business, but be sure all parties understand the risks, and how much each person is responsible for.

The type of business you put together will also dictate the risk that you assume. Creating a limited liability company keeps owners from personal responsibility for the debts of a failed business.

When you create your partnership, you should discuss the expectations for pay.

Most businesses do not generate profit within the first year or even the second year . The number one reason new businesses fail is that they don't have enough cash to pay the business' and owner's bills. Ensure you and your business partner know how you are going to make ends meet.

Generally, in a partnership, the assets belong to the business unless specified in the partnership agreement. Partners will then own a percentage of the value of the company property based on the agreement. This is usually only a concern for businesses when they are closing out, and owners are working through who gets what.

Plan for Buy-Outs, Dissolutions, and Exits

Partnerships dissolve for many reasons. One partner may decide the partnership is no longer beneficial. You should include buy-out terms in case one partner wants to leave.

You might consider adding a dissolution clause to the partnership agreement. If the partnership is not working out, it would be beneficial to have pre-agreed terms for splitting things up.

An exit strategy is a plan if both partners should want out. This is can be accomplished by selling the company, or by selling all the inventory, assets, and interests a business has.

A strong business partnership is built on open communication. Meet on a regular basis so you can share grievances, review roles, provide constructive criticism, and discuss future plans for the growth or direction of your business.

Your business may grow over time as you and your partner work together. You may want to readdress your partnership agreement as your business grows. You may need to add more partners, include senior employees, and include expansion agreements.

You could include this in your initial agreement, but it might be better to wait until you are in a position to consider growth and expansion.

It is simple to set up a partnership because there are no legal documents to file. A written agreement, signed by all partners, is a legal document recognized by law.

Partnerships are often an oral agreement between two or more parties. Oral agreements can present problems in case of disagreements, even though they are legally binding. Instead, avoid potential problems by drawing up a partnership agreement.

Your partnership agreement should include the following (at a minimum):

• Amount of equity invested by each partner
• The type of business
• How profits and loss will be shared
• Decision-making policies
• Partners' pay and other compensation such as bonuses
• Distribution of assets upon dissolution of the business
• Provisions for changes to the partnership or provisions for dissolving the partnership
• Parameters of a dispute settlement clause
• Settlement of the business in case of death or incapacitation
• Restrictions regarding authority and expenditures
• Expected length of the partnership

It's always worth considering a business partnership structure when you find someone who complements your skill set and you know will add value to your company. These partnerships can be enjoyable and lucrative if the right foundation is cemented in the beginning.

What kinds of business partnerships are there?

There are three types of partnerships. A general partnership (GP) involves partners who all have liability for debts and lawsuits. In a limited partnership (LP), one or more general partners manage the business and have liability, while other partners don't participate in the operations and don't have liability. Finally, in a limited liability partnership (LLP), all partners have limited liability.

What's the difference between a partnership and an LLC?

A limited liability company (LLC) with two or more members (owners) is treated as a partnership for income tax purposes. The main  difference between an LLC and a partnership  is that in an LLC, members don't hold personal liability for the company. In many partnerships, only limited partners are protected from personal liability for the company.

Small Business Administration. " Choose a Business Structure ."

Cornell Law School Legal Information Institute. " Alternative Dispute Resolution ."

Small Business Administration Office of Advocacy. " Small Business Facts ."

Internal Revenue Service. " Limited Liability Company (LLC) ."

Partner Business Plans in 2024: Why are They so Important?

Introduction

Business plans serve as a foundational framework that aligns the operational strategy of your partner firms with the overarching goals and expectations of your company. Tailored for each partner, these business plans outline specific sales, marketing, and training objectives that are designed to be in perfect sync with your organization's aspirations. These plans are indispensable tools for effectively overseeing your network, enabling you to evaluate and measure performance continually and, as needed, take strategic actions to bolster your partners on their path to success.

By collaboratively constructing business plans in conjunction with each partner, you foster a sense of cohesion within your indirect sales ecosystem. This shared roadmap ensures that all partners are working in synergy, collectively pursuing the identified actions necessary for accomplishing mutual success, further strengthening the strategic alignment between your firm and its partner network.

Develop Partner Bussiness Plan: Two Key Steps to Consider

1. know your partners well.

A thorough understanding of your partner network is a fundamental prerequisite for the successful development of partner business planning. Within your indirect sales ecosystem, business providers, integrators, value-added resellers (VARs), IT service companies, and resellers each operate within distinct logic and economic models. Acquiring deep insights into the nuances of each partner type is crucial for crafting business plans that align with both your partner's strategic objectives and your company's overarching goals.

Isabelle Castellanet, the founder of IXC, a firm specializing in Partners and Growth, emphasizes the importance of recognizing the diverse expectations and requirements of partners based on their typology. She notes, "Depending on the typology of its network, it is important to see that the partners do not expect the same information. A wholesaler, for example, does not require the same information and tools as a VAR, an integrator, or even a third-party publisher who prescribes or resells for you."

Recognizing these key elements in partner business planning ensures that your efforts are tailored to cater to the specific needs and expectations of each partner category, ultimately fostering a more productive and mutually beneficial collaboration.

2. Have a Well-Defined Global Business Objective

Creating a robust business plan in collaboration with your partner necessitates a well-defined and quantifiable overarching business objective. This objective must be crystal clear and expressed in measurable terms. For instance, it could be aimed at achieving specific milestones, such as:

• Capturing more than 20% of the market share in France for your product;
• Reaching an annual turnover target of "X" amount or;
• Expanding your operations to attain 5% of the turnover in a new country.

This overarching business objective serves as the cornerstone upon which you will construct the business plans tailored for each of your partners. The core concept is to apportion individual objectives to your partners that harmonize with your global strategy. Consequently, each partner's unique business plan becomes an instrumental component contributing to the fulfillment of your company's overarching business objective. This strategic alignment ensures that the combined efforts of your partner network work in unison to advance your business toward its ultimate goals.

Establishing a Partner Business Plan: The Objectives

Setting objectives within your partner's business plan is essential, engaging, and decisive for the success of the partnership. Aligned with the main objective of your business, these objectives, whether quantitative or qualitative, must be measurable and, therefore, quantified.

Set Quantitative Targets

Based on a careful analysis of historical sales performance, specific criteria such as outcomes, geographical location, and seniority within the partner network, distinct objectives will be strategically allocated to each partner. These objectives encompass a variety of key areas that guide their contributions to the partnership:

• Business Objectives on Sales Volume and Turnover: Partners will be tasked with well-defined business goals related to sales volume and revenue generation. These objectives may be tailored to the partner's track record, the market potential in their location, and their historical sales figures. This approach ensures that targets are realistic and achievable, motivating partners to excel in their specific market segments.
• Marketing Objectives through Event and Webinar Organization: In addition to sales targets, partners will also be entrusted with marketing objectives, which often involve organizing events and webinars. These events serve as crucial touchpoints for engaging potential customers and driving brand awareness. The specific objectives may vary depending on the partner's strengths and past performance, encouraging them to leverage their marketing expertise to enhance the partnership's overall success.

By customizing these objectives based on partner history and characteristics, the partnership becomes more adaptable and efficient, with each partner playing a unique role in contributing to the collective success of the collaboration. This tailored approach maximizes the potential for growth and achievement within the network.

Set Qualitative Objectives

Incorporating qualitative objectives into your business plan imparts a heightened level of professionalism to your partner network. This is especially pivotal when embarking on new indirect sales partnerships. Training sessions play a central role in this process, serving as a crucial avenue for partners to equip their sales teams with comprehensive knowledge about your brand. These sessions not only elevate your partners' understanding of your products but also empower them to embrace and disseminate your vision over the short, medium, and long-term horizons. This alignment ensures that they are seamlessly integrated into your strategic framework. As an illustrative example, you may set a target, such as achieving a certification for a specific number of "X" sales, within your business plan.

To ensure the optimal monitoring of your business plan and to gauge the progress of your partners, it is imperative to implement KPIs. These quantifiable benchmarks enable you to assess the attainment of objectives, offering valuable insights into areas where potential refinements or additional support may be necessary. By embracing KPIs, you introduce a structured, data-driven approach that ensures the partnership remains on a well-tracked trajectory toward realizing the objectives outlined in your business plan.

Have Regular Monitoring

In pursuit of ongoing refinement and shared operational efficiency, it's essential that these objectives are periodically defined and subject to regular monitoring. Constructing a business plan without a system for ongoing objective assessment is a critical oversight, as it can become too late to take corrective action should your partner deviate from their established objectives. To ensure the long-term success of your collaborative efforts, it's highly advisable to assess and potentially adjust objectives on a monthly basis, accounting for variances such as weaker performance in a specific month, such as August.

KPIs play a pivotal role in facilitating the monitoring and analysis of your partners, allowing you to identify both their strengths and areas that may require improvement. With a monthly review and a systematic reporting mechanism, you gain the capability to:

• Set Realistic Objectives : By closely aligning objectives with the current conditions on the ground, you ensure that they remain practical and attainable in the context of evolving market dynamics.
• Monitor Implementation and Achievement : Regular tracking using KPIs enables you to gauge how well partners are executing planned actions and progressing towards the predefined objectives, offering insights into areas that might need attention.
• Provide Support : Armed with this detailed data, you are better equipped to initiate timely and targeted actions that can help partners overcome challenges and, in turn, assist them in reaching their objectives. This proactive approach ensures that your partnership remains adaptive and robust, fostering sustained success in a dynamic business landscape.

The Essential Tool to Build a Business Plan and Manage it

In the endeavor to establish a comprehensive business plan and ensure its effective management with full transparency into your partner's activities, a PRM, or Partner Relationship Management system, emerges as the quintessential tool. Going beyond the capabilities of conventional management software, a PRM empowers you to systematically structure your indirect sales processes and engage with your partner ecosystem in real time, irrespective of the hour or location.

When crafting business plans for your partners within a proficient PRM platform, you can expect to benefit in several key ways:

• Tailored Business Plans : A robust PRM system should facilitate the seamless definition of unique business plans for each partner, accommodating their specific objectives, strengths, and market dynamics. This tailored approach ensures that each partner's plan is finely tuned to optimize success.
• Real-Time Progress Tracking : The PRM offers the invaluable advantage of real-time progress tracking for the objectives set within these business plans. It allows you to stay updated on your partner's performance, offering insights into their achievements and areas that might require attention or support.
• KPI Integration : Effective PRM systems seamlessly integrate KPIs into the platform, providing you with a set of critical metrics that pinpoint what is vital for the success of your partner's business plan. These KPIs offer the ability to focus on the most significant aspects of your partnership, enabling data-driven decision-making and strategic adjustments as needed.

By leveraging a PRM , your business can optimize its partnership management, ensuring that business plans are not only efficiently established but also actively tracked and adjusted as necessary, fostering the mutual success of both your company and your partner network.

Build your partnership program and strengthen partner engagement.

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How to create your partner business plan in 5 easy steps

One of the partner business plan tools we use with our small firm clients is the STAGe model. This is widely used to create 3-year or 12-month business plans for them. The good news is that it is versatile enough to help you create your 3-year partner business plan or 12-month partner business plan or vision for your practice. In this article ,I explain how to use the tool, plus you can download a template to create your 3-year partner business plan or 12-month partner business plan for your own practice. 

What does the tool enable you to do?

The STAGe Tool is a one-page vision summarising your practice’s expected performance over the next 3 years or 12 months. It gives you a simple visual way to explain how your practice will develop in the future. In other words, it acts as a very simple, but highly effective tool to help you create your partner business plan – a key component of your business case for partner.

The tool consists of 5 circles that correspond to now, year 1, year 2, year (or the timescales of your choice.), or Q1, Q2, Q3, Q4. The circles are dissected by axes which represent the performance measures that best illustrate how your practice will develop. Each performance measure is broken down into what it will be at each year. This article assumes you are creating a 3-year partner business plan. However, you can also use the same template to create a 12-month partner business plan.

Click here to download your free PDF of the STAGe model to help you rapidly put together your partner Business plan.

Here is a completed STAGe tool:

Stage 1: Envision the future

Take a moment to think about where you want your practice to be in 3 years if you are successful at the partnership vote. (Or 12 months if you are being asked to create a 12-month partner business plan) You may find it useful to do this exercise away from your desk and distractions.

You may like to consider the following areas:

• Average spend?
• Services offered?
• Key accounts won? Or were panels appointed too?
• Revenue and/or GRF?
• Key metrics which are important for your firm, e.g. WIP, Lockup, utilisation?
• Contribution to the firm?
• Structure of your team/practice?
• Development required?

Business Development

• No. of leads required a month?
• Referrers needed?
• Sectors/markets/Niche to target?

Read: What needs to go in the 12-month marketing plan for your business case for partner

Stage 2: Identify the really important metrics or things for your practice

In stage 2, you identify what are the really important things for you and your practice. Those things that if you focus on them you will achieve your 3-year. These then become the axes on your STAGe diagram. Ideally, you will identify 8-12 measures of performance to accurately show how you will grow your practice in the next three years.

One of the most sought-after courses in our Progress to Partner Academy i s called “ How to Build a Cast-Iron Business Case for Partner” .It’s a must-have in your arsenal of tools and guidance to help with your career progression. There is also a section in Progress to Partner Academy on the Partnership Admissions process with guides and recordings to help you find your way through the system. Check it out!

Stage 3: Identify your year 3 performance measures

Now take the STAGe template and label your performance measures and name the years on the concentric circles. For each performance, measure the axis and add what you are currently achieving. You now want to define your year 3 performance measures. By defining year 3 first you can then work backward towards your 12-month targets.

It can be very helpful to start the year 3 discussions by considering the fundamental financial measures for your practice such as revenue, GRF, turnover, profit, or contribution. This is because they are normally easier to complete, and it often sets the agenda for the rest of the performance measures.

Stage 4: Identify year 1 and 2 performance measures

Once you have completed your year 3 performance measures you then want to work along each of the performance measures axes to complete year 1 and year 2 goals. You may like to use questions such as:

“If I am to achieve this level of performance in year 3, what level should I achieve in year 2?”

Then…

“If I am to achieve this level of performance in year 2, what do I need to achieve in year 1? Is this too big a stretch from where I am now?”

At the end of this stage, you should have a fully completed diagram with each performance measure having a number or statement for each year on the diagram.

Stage 5: Critically review your partner business plan

Now you have completed the partner business plan, it is time to critically review it. That means:

• Are the targets really feasible? Do the numbers stack up and relate to each other?
• Is it stretching enough? Or could you easily achieve more?
• Have you missed anything? Is anything really obvious? Any blind spots?

If you haven’t already click here to download your free PDF of the STAGe model to help you rapidly put together your partner Business plan.

Once you have completed your partner business plan, it’s time to get feedback on it, plus identify the projects or activities which are critical to achieving your year 1 targets.

For more guidance on how to progress your career in your firm why not  sign up to my weekly newsletter here   and you’ll find out what you need to be working on in your career development (and how to make the time for your career development) to progress your career in your firm.

Or Check out our  How to Build a Cast-Iron Business Case for Partner self study course .  ✔️ What makes a good Business Case for Partner ✔️ 5 things you need to consider so the partners take notice of you ✔️ What needs to go into your 12-month business development plan

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How To Build A Partnership Business Plan

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Partnerships have been an integral part of many go-to-market strategies for decades. For some brands, they drive an enormous share of total sales. For others, they drive next to nothing. What separates successful programs from unsuccessful ones is often the focus emanating from a strong business plan. As with any other go-to-market approach, partnership requires analysis and planning to achieve maximum potential.

A partnership business plan can help companies understand the channel's potential and the investments necessary to achieve those results. It also identifies the business partnership priorities that the team should focus on for maximum business impact. It’s different from a standard business plan in that you are not providing a rationale for an entire business but instead creating a roadmap for this critical business channel.

Setting appropriate expectations is even more critical than for other channels because of misconceptions many business leaders have about partnership. Many companies pursue partnership because they believe it will be a low/no-cost approach to driving sales. Somehow, goes this flawed thinking, the business partner will do most or all of the work of promoting the brand, and we can sit back and reap the benefits.

Certainly, one great rationale for the channel is strong ROI, but partnerships require resources and focus to succeed. A business plan can help clarify the business potential of the marketing strategy and the people, systems, and processes needed to achieve those results. This eGuide outlines the essentials for a strong partnership business plan and provides tips on how to deliver it. It provides insight as to what resources are needed to reach goals.

It is important to first set up the costs of setting up a program and the basic formula for customer acquisition.

The basic costs of a partner marketing program are:

Fixed costs:

• Software to recruit, track and pay partners. This can also be a variable costs since some platforms charge a percentage of sale. But, most have a component that is a flat fee.
• Service/headcount to recruit and manage partners. This can be an agency, an in house team or managed service from your tech platform. Sometimes agencies will work on a commission basis, but mostly this will be a relatively stable annual cost. Regardless, be aware that unlike programmatic, search or social, partnership marketing is still relationship driven and requires humans to connect. This takes time and it is facilitated by people who have relationships.

Variable costs:

• Commissions paid to partners for a sale.
• Any additional media costs including placement fees.

Note: be sure to build in a ramp up time for your partner program. Unlike search or social you can't just "turn on" a partner program. You need time to recruit partners and activate these partners. There is a lot of blocking and tackling involved and you should not expect to see results overnight. The rule of thumb is six months until full activation, but that varies by industry.

Customer Acquisition Cost

Ultimately, the success of failure of a new marketing channel will be its ability to acquire customers at an equal or lower cost than other channels. Start by identifying your overall CAC so that you can determine if your partnership financial and operating plans will be effective.

​The basic formula is: {Fixed costs (like software, service, people) + (variable costs *volume)} / customers = CAC

Why Business Plans are Important

As partnership and affiliate play an increasingly important role in the total go-to-market for a brand, companies expect their leaders to offer a strong business case for additional investment. A solid partnership business plan will:

• Help the company understand the business potential for partnerships
• Enable business owners to understand and predict costs and benefits for proper resource and revenue planning
• Provide straightforward ways to track progress toward achieving channel goals
• Identify potential risks to achieving the goals and how to mitigate them
• Establish a clear timeline of when a company can expect to achieve goals
• Provide a complete picture so that the company can make an informed business decision on whether and how to invest in the partnerships channel

Beyond these tangible benefits, there is also the advantage of presenting and interpreting the opportunity in a context accessible to leaders within and beyond marketing.

Critical Components

Here’s a summary of critical elements for a partnership business plan and why they are important:

Executive Summary: This brief synopsis should highlight the key findings in the plan, from projected revenue and costs to the various advantages and risks of pursuing this line of business. Writing this part of your plan last is best after fully developing the other elements.

​Scope and Description: This section of the plan provides a high-level outline of the types of partnerships you recommend pursuing - not channel by channel but rather in the context of what characteristics must be present in a potential partnership to warrant pursuit. We’ll provide a list of thought-starter questions to help you keep this high level and strategic rather than too specific and tactical.

​Competitive Analysis: This section outlines how your key competitors leverage performance partnerships to build their businesses. Understanding competitive partnership activity contributes valuable learnings to your decisions about which partnerships to pursue.

Recommended Partnership Types: This section will enable you to list the types of partnerships you believe warrant pursuit, in priority order. The number of available partnership types is constantly expanding, so it makes sense to prioritize partnerships based on your revenue, profit, and brand equity goals. You should also consider what signals are available to ensure that potential partners are likely to consider working with you.

Operating Plan: Here is where you will outline the people, software, budget, and other resources required. You should also outline why your team is qualified and likely to succeed in building out the channel.

Financial Plan: Outline the costs and revenue expectations according to the approaches and timelines in use by your company. The level of granularity here really depends on how your company plans go-to-market initiatives and reports on performance.

Headwinds and Tailwinds: This section outlines the uncertainties that may help or hinder your ability to hit your targets.

Let’s consider each of these sections individually.

Executive Summary

Smart business opportunities can always be explained in a relatively small amount of words or “space.” Many companies require the rationale for an entire multi-million dollar business to be summarized in a single page. You can try to hit that target or give yourself two pages. But not more than that. Your ability to outline a business succinctly helps senior executives quickly understand why they should prioritize your initiative and demonstrates your ability to focus on what’s most important. Ask yourself:

• How can I explain performance partnerships, the potential range of available opportunities, and why partnership represents an advantageous channel for business development?
• What do senior executives need to know to understand the business potential of the partnerships channel?
• What arguments and data are essential to evaluate this channel properly?
• What topline data should I include to demonstrate the business value of pursuing the channel?

Providing hard numbers in your summary is critical if you are to gain buy-in from your leadership team. They must weigh any financial investment decision against the potential business value of other initiatives competing for resources. Make it easy for leaders to understand the enormous revenue and profit from partnerships. Use this channel's massive ROI and ROAS to telegraph why your recommendation warrants commitment.

It can be tempting to try to write this section first. Don’t yield to that desire. By building out your other plan sections first, you will have ready access to the information for the executive summary.

Scope and Description

This critical section explains the range of partners and types of partnerships you recommend pursuing. Having articulated guard rails will help your team focus on the best opportunities and help prevent “swoop and poop” requests from outside leaders and teams.

Start by declaring your commitment to PERFORMANCE or OUTCOMES-BASED partnerships, and define this category clearly. From there, outline other criteria that will help guide your decisions on whether to pursue and accept specific partners and programs. Consider:

• What sort of scale should a partner offer to warrant your time and attention?
• What brand considerations should be taken into account?
• What targeting considerations should be “musts”?
• Are you willing to pursue temporary partners, or do you want to focus only on evergreen relationships, and why?

Competitive Analysis

Competitive analysis can be an invaluable aid in guiding partnership decisions. Including competitive analysis in your plan serves several purposes:

• It helps establish the channel as a viable option for your business
• It provides insight into the potential scale and most significant opportunity sectors
• It can help you determine appropriate offers so you can build your sales and profit models
• It provides urgency to senior management (FOMO)

Competitive information is an aid to judgment, not a predictor of your results. It helps establish a baseline from which you can develop plans to surpass competitive program performance.

Here are a series of questions to help you gather as much relevant data as possible quickly:

• What sorts of offers are my competitors making in their affiliate programs? You can also get great insights into how your competitors manage programs on knoji.com. Most programs also have affiliate intake pages on their sites that can be found in site footers or with Google.
• What can you learn about the business structure of your competitors? Use LinkedIn employee searches as a starting point here.
• Visit the top cashback and coupon sites to see if your competitors are active there.
• Use an SEO tool like SemRush, Moz, or Ahrefs to search for competitor backlinks.
• Monitor their websites and social media to look for signs of partnerships and offer programs.
• Subscribe to their marketing automation email programs (assuming your domain isn’t blocked. It usually won’t be.)
• Is there evidence that they use influencers to deliver brand messages and drive direct sales? What are the terms under which they work with influencers? Often it is easy to find insights on your influencer platform tool or by doing Google searches for program pages.
• Large partners can sometimes share publicly available info to help you structure successful programs.
• Searching for “Brand Trademark + Deals” can often uncover search partners and other partners active in a brand’s programs.
• Searching LinkedIn for partnership-related titles can give you a sense of the size and focus of a brand program.
• Search the offer “malls” of credit card reward programs to see if your competitors have offers available there. Note that card-linked offers are generally confined to retailer brands, so that can simplify your search.

These and other strategies can help you understand the partnerships competitors are pursuing and the specifics of their commission offers.

Recommended Partnership Types

Explain the specific classes of partnership that you want to pursue. Some categories to consider include:

• Traditional Affiliates (e.g., RMN, GSG)
• Mainstream Publishers (e.g., Conde Nast)
• Blogger Influencers (e.g., Pioneer Woman)
• Social Influencers (e.g., Paul’s Hardware)
• Fintech Partners (e.g., Venmo)
• Card-Linked Offers (e.g., Cardlytics/CC Reward Programs)
• BNPLs (e.g., Klarna)
• Conversion Optimization Partners (e.g., RevLifter)
• Travel Rewards Programs (e.g., United Mileage Plus)
• Clubs and Associations (e.g., AARP Rewards)
• Employee Benefits and Rewards Programs (e.g., Bucketlist)
• Brand-to-Brand Partnerships (e.g., brands in related categories)

This is by no means an exhaustive list but does include many of the most popular partnership categories for consideration.

The right partners for your business depend on your brand, price point, buying cycle, compensation rate, and other factors unique to your category and market position. Further, your brand values and brand equity also play critical roles. For example, some brands are entirely opposed to offering discounts publicly, which might rule out certain traditional affiliates. Other brands might be a great fit for travel rewards programs. Still others might be ideal for influencer programs because many opinion leaders write about your category.

Naturally, some of these channels are more developed than others. Some market sizing data is available for the most developed categories like traditional affiliates. Others will have a dearth of information. But even in those categories that are less developed, you can put pen to paper to make some estimates of potential sales from a channel.

Creating an Operating Plan

Any business needs resources to enable its establishment and growth. A partnership business is no different. An operating plan outlines the people, investment, and other resources necessary to facilitate success.

When creating a partnership operating plan, it’s valuable to start your thinking with “hats, not heads.” Define the roles and associated responsibilities needed before thinking about the individuals who fill them. While extraordinary individuals have tremendous value in a business plan, starting with hats instead of heads ensures that the needs of the business dictate the organization, not the wants of specific individuals.

For a company to deliver scalable and repeatable results, you need to create an organization and operating principles that are not dependent on specific “superstar” individuals. Investors say that one of the most common mistakes businesses make is building an organization and planning dependent on "superhuman" individuals. Remember that your star players can power more success for a business plan - they are not the essence of that plan. If you struggle with this recommendation, consider this: would you base your entire partnership program on an individual partner?

From there, you need to think about the financial investment you need. Take the time to think through your needs. Many people rush through this stage and later find themselves strapped when forgotten expense types emerge. At the same time, recognize that a business plan is also an expression of the potential value that can be driven through the channel. “Sandbagging” may price you out of consideration. Similarly, delivering too rosy a picture can help you skate through the early stages only to be called on the carpet later when your projections prove inaccurate.

The operating plan development process should be one in which you choose what to do first and what can wait. Think through what the company wants from you. Do you need to be profitable by month three or year three? You want the aggressiveness of your recommendation to align with company goals and investment style.

You cannot do everything at once, or you will do everything poorly. Prioritize the opportunities and layout why you have chosen those priorities. Consider the law of threes. Accept that few organizations can do more than three big things simultaneously. “Big” is a subjective measure, and bigness varies based on that organization's size and core competencies. Still, this concept helps guide people to a reasonable number of priorities for a period. Some would suggest that even three is too many. But surely we can all agree that more than three is a bad idea. Finally, it is often helpful to deliver multiple operating plans for different revenue projections/trajectories. Offer a low, medium, and high investment scenario to match the low, medium, and high revenue and profit projections you define in the next step.

After developing your “hats, not heads” plan, it’s perfectly valid to summarize the outstanding qualifications of those team members you have on hand to meet the business needs. Do so in the context of how they enhance your hat-defined org. That helps give your management team greater confidence in the wisdom of funding the initiative.

Creating a Financial Plan

The operating plan is a critical input for your financial plan. The financial plan is a projection of the revenue and profit from the channel. While, as you develop it, you will likely return to other elements of the business plan to adjust assumptions and figures, having baseline or ballpark figures for those elements of your program is crucial as you start to define the potential value of the business to your company.

There are many templates for building a financial plan available online. They are generally similar and often available without cost. They will require some adaptation to “fit” a partnership initiative, but they provide a good foundation.

Additionally, check with your CFO or company financial team to see if they have a model they believe in. This serves several purposes:

• It aligns your effort to a format they are familiar with
• It ensures that it is easy to understand your recommendations and compare your plan to other potential company investments
• It demonstrates that you wish to partner with the financial team, which will be critical for your success.

If your financial team has a financial planning and analysis (“FP&A”) person, find out if you can ask for their help building your models. This will help you immeasurably and ensures that one of the critical evaluator/influencers is on your side later. Treat your company's financial team as a potential investor because that's what they are.

Identifying Headwinds and Tailwinds

It’s valuable to consider what macro changes could positively or negatively impact your success. Think both inside and outside the box in this area. Competitors, economic forces, and regulatory changes are three important considerations here, but there are likely others. Ask yourself:

• What does an unsuccessful versus successful partnership look like?
• What might affect customer receptivity to my products, services, and offers?
• What might affect the willingness of the best partners to work with me?
• What could positively or negatively affect the commission or payments I have to make per desired outcome?
• What partnership agreement requirements could have a material impact on our success or liability?
• What might limit the availability of data essential for measurement and optimization?

Once you have arrayed these potential challenges, you may be able to think of ways to reduce your exposure. Start by thinking about how intellectual property, speed to market, partnership exclusivity agreements, or other tools could help mitigate these threats. But whether or not you can think of ways to protect yourself from these risks, having identified these potential issues helps the business fully understand the opportunity you bring to them.

No sensible business leader will expect the partnership channel to be risk-free, but they will want to understand the scale and likelihood of the dangers. If your company cannot tolerate the potential problems associated with one or more of these key risk areas, better to know now than when it happens, and you have to explain the situation to the management team.

Conclusions

A partnership business plan's format, breadth, and depth should align with how your company expects such recommendations to be made. In general, it’s valuable to have an executive summary presentation and a more in-depth document available, along with detailed spreadsheets that chronicle your establishment and growth expectations.

For some, doing all this work may feel like a waste of time. After all, aren’t the benefits of a robust business plan obvious? But the plan not only helps your company understand and assess the opportunity. It also ensures that you have thought through the way forward and can make more of the right decisions on days 1, 91, 366, etc. Planning is good. Prioritization is good.

Having a plan also helps an organization understand what they approve and what will be necessary to achieve a strong partnership revenue stream. As discussed earlier, many companies enter into partnership thinking it is a low effort, low-cost means of driving rapid growth. By setting appropriate expectations and outlining the tremendous revenue and profit potential, you set yourself up for maximum success.

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How to Create a Partnership Proposal [With Free Template]

When embarking on a business partnership, expect challenges. Partners have different personalities, working styles, daily schedules, and initial investments. You need to juggle working together (possibly for the first time) while addressing market needs and differentiating yourself from competitors.

A partnership proposal can help make those challenges a little less daunting by clarifying the details of your collaboration before you even launch your business. It can get everyone on the same page, reducing the risks of detrimental disagreements later on.

But drafting such a proposal is no small task.

To help you on your journey, we’ve got step-by-step instructions and a helpful partnership proposal template .

What’s in this guide :

Why you need a business partnership proposal

How to create a proposal for a business partnership, partnership proposal template & software.

Research shows that 70% of business partnerships fail—and (here’s the good news) a clear agreement is one of the best ways to improve your odds of success.

Oftentimes, partners will equally share the burden of losses and the gift of gains. But your share should reflect what you put into the business, both in terms of time and money. So if one partner will be giving more, they should also get more out of it. By accurately calculating equity, salaries, and profit draws in advance, you can be sure that each partner is getting their fair share according to their initial investment and ongoing role in the company.

A partnership proposal with clear terms can help settle any financial or legal matters that may arise later. But on a more positive note, it will also improve the quality of your collaboration. When all the terms are laid on the table up front (and no one is guessing or assuming), communication between partners will begin with a much stronger foundation—paving the way for a more profitable relationship.

Creating a proposal for your business partnership is complicated, but fortunately, you don’t have to go it alone. Follow these simple steps to cover all of your bases.

Step 1. Research what your proposal should include

The first step is to research what you need to include in your proposal, such as the share of profit and loss, the managing duties of each partner, and what should happen in the event of the death of a partner. This is a critical legal document so you need to get it right..

You don’t have to get it perfect the first time, as the terms will likely require negotiation. But covering all of the necessary information will demonstrate your attention to detail and ensure that the preceding negotiations are thorough.

Make sure to research requirements that are unique to your partnership type , which usually falls into one of these 3 categories:

General partnership - Shared day-to-day operations and liability for debts and owners.

Limited partnership - One or more partner doesn’t participate in day-to-day operations and is not liable for debts or lawsuits (but receives profits). This is typically used for inactive investors.

Limited liability partnership - Liability protection is extended to all partners so that no one is responsible for the actions of another partner. This is typically used for professionals operating out of shared office space, such as accountants, financial advisors, or plastic surgeons.

Because the taxation structure will affect the way that earnings are distributed and reported, you should also research details specific for your province or state of incorporation as well as your entity type (limited liability corporation, c-corp, etc.).

Brainstorm more information to include based on your unique business and what each partner brings to the table. For instance, if one partner is joining the partnership with a large social media following of ideal customers, you might want to outline how that social media account is expected to be used and what content will not be permitted on that account once the partnership begins.

If you use a partnership proposal template, you’ll save a lot of time on both research and writing. Preview our template here.

Make sure to consult with a business lawyer to get their take on the necessary terms.

Step 2. Outline your proposal

Now that you have your checklist for what to include in your proposal, it’s time to start organizing all of that information into a cohesive outline. A proposal template will save you time here. Start off with the template and then include additional terms that matter to your business.

We suggest this outline for your partnership proposal:

Name and Business - Basic business details like business name and address.

Term - When the agreement begins.

Capital - How partnership capital will be maintained.

Profit and Loss - How profits and losses will be shared and credited.

Salaries and Drawings - How salaries and profit draws will be managed.

Interest - Whether or not initial investments will receive guaranteed interest payments.

Management Duties and Restrictions - How management duties will be split, and what tasks can’t be undertaken without agreement from all partners.

Banking - What chequing account(s) will be used.

Books - How bookkeeping will be managed.

Voluntary Termination - How the partnership can be voluntarily dissolved, and how assets will be distributed if this occurs.

Death - What will happen in the event of the death of a partner.

Arbitration - Basic statement on arbitration for the agreement and the legal association that will be used.

You might be wondering if you need to add a cover letter to your outline. If you don’t need to convince anyone to join the founding team, you probably don’t need a cover letter. But if you’re trying to win over a partner, then check out this guide to writing a cover letter and add your letter to the very beginning of your proposal.

Step 3. Write the proposal sections

Time to write.

A partnership proposal has a very different style than most other business proposals , which are typically sent to prospective clients in order to win deals. For those proposals, you’re trying to sell . But with a partnership proposal, you’re trying to clarify . The prospective partner needs to know what they’re signing off on in order to give you a yes. What’s expected of them? What percentage of equity will they receive?

Because the goal is different, the writing style should be different too. Write using clear, simple, and legally accurate language for the majority of the proposal. By keeping the language of the proposal straightforward , you’ll eliminate any confusion and potential for disagreements later.

Take this text from our partnership agreement template as an example of the writing style you should aim for:

A separate capital account shall be maintained for each partner. Neither partner shall withdraw any part of his/her capital account. Upon the demand of either partner, the capital accounts of the partners shall be maintained at all times in the proportions in which the partners share in the profits and losses of the partnership.

If you need to create content to convince on-the-fence partners, you can do so with your cover letter, business plan, or presentation slides that will go along with the proposal. You might cover the addressable market, your competitive advantage, pricing model, etc.

Step 4. Add e-signatures

The next step is to add e-signatures to your proposal. This will turn the proposal into a binding agreement, so that once signed by all partners, the partnership can begin with clear terms.

You should add the e-signatures to the final page of the proposal.

Make sure that the e-signature software you use is legally binding .

Step 5. Review, sign, and send it

And lastly, it’s time to make sure your proposal is perfect. Review all of the terms and make sure you’ve covered everything in your checklist.

If you can afford it, have a business lawyer review your agreement before you sign and send it. This should be cheaper than having them draft an agreement from scratch (and can save you a lot of money and stress in the long run).

When you’re ready, sign the proposal yourself and then send it for signature to your partners.

You should not open up any bank accounts, file articles of incorporation, take out loans, or conduct any other activity with financial implications until the proposal is signed by all partners. If you do, a partner could later argue that they’re not liable. Instead, use the time before the proposal is signed to work on your business plan and research your addressable market.

Proposify makes it easy to create beautiful proposals for both internal and external use. We offer 75 unique proposal templates that show you exactly what to include and help you draft your proposals quickly.

You can also design your own proposal templates, save content snippets, and track stats on proposal views and closed deals.

How to Write a Business Proposal [Steps, Tips, & Templates]

September 30, 2022

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The Essential Guide to Partner Planning

Build your partner planning framework.

Partner planning aims to have the right quantity of products in the right places at the right times to satisfy customer demand in an efficient, cost-effective manner. While the concept seems elementary on the surface, the complexity arises once you dig deeper. A channel leader must review their partner plan to ensure the strategy aligns with the company’s desired business outcomes.

Through years of experience and a rigorous approach, our team of channel experts at Spur Reply have identified five essential steps to guide partner planning.

Step #1: Understand the present strengths and weaknesses of current efforts

Step #2: know your growth levers, step #3 define the required ecosystem need, step #4 evaluate partner performance, step #5 create partner-level action plans.

Developing an understanding and maintaining a line of sight into the strengths and weaknesses of your channel strategy is integral to driving revenue acceleration through the partner channel. It is essential to review, analyze, and benchmark your teams’ and programs’ performance regularly and can be done using a model that examines 18 points of execution across six primary areas:

• Are you set up to reach your strategic objectives?

Capacity planning: Do your existing partners deliver enough sales velocity to hit your targets?

Joint business planning : Are you ensuring your partners are aligned to the right goals?

Partner scoring : Do you know who the right partners are?

• Have you created a model that will continually grow your base?

Partner business proposition : Is everyone aligned on the compelling reason you beat the competition?

Partner onboarding : Are you maximizing partner activations throughout your recruitment efforts?

Partner recruitment : Do you understand and act on the profile of your best possible candidates?

• How good are your partners at selling your goods and services?

Campaign development : Do you know which partners are effective marketers of your solutions?

Go-to-market playbook : How aligned are your partners and field sellers to deliver unified joint sales?

Partner enablement : Are you arming your partners with the tools that help them with customers?

• Are your costs-to-serve too high for you and your partners?

Channel incentives : Is your contra-revenue program driving value?

Deal registration : Does your program incentivize sales behavior or simply transfer margin?

Partner investment framework : Are you getting sufficient return on your other investments?

• Do your programs keep partners loyal?

Cloud revenues structure : Have you made the same shift to the cloud as you expect from partners?

IP development : Do partners see you supporting their future IP development?

Partner program : Does your program deliver enough value to partners?

• Do you execute most effectively and efficiently?

Partner co-selling model : Are you partner managers what’s expected?

Performance dashboard : Do you hold all stakeholders accountable to the same metrics?

Pipeline management : How central is managing a specific partner pipeline for your partner field sales?

Use these questions as a guide to review the performance of your channel programs. You should be able to classify the health of your channel processes as one of the following:

• Unstructured (few formal processes in place)
• Ad Hoc (processes defined as guidelines with limited adherence)
• Advanced (multiple scenario-based processes in place)
• Robust (automated processes adjust based on defined parameters)
• Structured (formal process with disciplined adherence)

Formally benchmarking your programs and processes will then allow you to improve the effectiveness and efficiency of your channel programs.

Another critical element of partner planning is the ability to diagnose channel performance against a vendor’s strategic product focus and growth model. Spur Reply has developed the Growth Profile TM Strategic Model to help map product priorities to sales and partner performance in a quantifiable manner. The model is composed of 4 quadrants to classify which products are in each stage of the growth cycle:

Incubate - Break into new markets and technology by concentrating on research and development efforts with a new or existing channel or direct resources.

Optimize – Maintain sales with programmatic reductions by redirecting resources from low-performing elements to higher-performing elements to increase efficiency and effectiveness.

Perform – Maximize sales and current revenue flow with existing partners and direct sales resources.

Transform – Strengthen to scale or achieve performance leadership by recruiting new partners or adding additional direct sales resources.

Having a clear understanding of your growth profile is essential, as it quickly helps you determine the right strategic balance to recruit, grow, develop, or prune your direct and partner sales base.

Managing your partnership community to ensure it contains the right mix of partners is vital to sound channel management. Partner managers need to have both a full understanding of the company’s partner community and how to optimize the community’s performance — using five simple levers.

• Contribution : What is the sales velocity of each partner? Sales velocity refers to how quickly the company converts leads to sales and the value of each of those closed deals over a set period. Almost everyone measures sales velocity, and you likely have data to calculate the rate for each partner.
• Consumption : How effective is the partner at driving customer adoption and usage? If contribution represents revenue, then consumption is the increase in the average customer’s lifetime value through affiliation with the product or service.
• Coverage : What markets does the partner cover? Your ecosystem capacity is influenced by the mix of partner types and the number of partners in each segment, as well as partner attributes such as customer served, business models, and solutions offered.
• Capability : How aligned with strategic products is the partner? Capability is a combination of the partner’s knowledge and its effectiveness at bringing it to bear with targeted customers. Every revenue dollar is not equal when it comes to building a growth engine, and a partner’s capability is critical.
• Commitment : How steady and certain are the partner’s results? Most partners work with multiple vendors, so loyalty is a crucial determinant of channel revenue. A partner’s commitment will affect how it contributes to your growth curve.

Planning should inform channel management activities such as data-driven models for recruitment and development, balancing engagements based on strategy and performance requirements, and testing partner business propositions across segments.

In the evolving channel space, leaders have limited resources to influence partners and meet business objectives, and a standard partner scoring system can boost partner value and returns. Partner scoring can reveal the strengths and weaknesses of each partner, revealing opportunities for potential incentives, management, and scaling strategies.

We believe that partner scoring should be more than a forecasting tool. The framework can help increase sales, improve ROI, and re-direct partner behaviors to high-value actions. Spur Reply uses a three-step approach for calculating a Partner Evaluated Revenue Capacity (PERC) score, considering both current performance and potential for growth.

• Use the 5Cs to rank each partner. The 5Cs are Contribution, Consumption, Capability, Coverage, Commitment. For each, set weights based on your channel strategy and intricacies of your partner ecosystem.
• Rate each partner into peer-levels using a simple five-star rating. Partners that score well in the 5Cs are 5-star partners and the scale should adjust down from there.
• Calculate a final PERC score across the star grouping of partners in order to assess whether a partner is performing above, at, or below average for similarly sized partners.

The PERC score allows you to create an action plan for partners and even extend the model to get more value. You can evolve from the core model and customize your PERC score, create better dashboards, compare like partners, simplify research, and strengthen capacity planning.

The final element of effective channel planning is partner business planning, which improves your ability to set goals, manage commitments, and drive partner performance against benchmarks.

We recommend you track partners and build out your channel management strategy in five key areas:

Business Model – The design of a partner’s business

Industry Importance – The partner’s focus area

Product Focus – The products the partner highlights and emphasizes

Program Membership – Partner program membership and status

Vendor Alignment – The vendors your partner is working with

By developing a firm understanding of these five aspects and leveraging data-driven insights to adjust strategies accordingly, companies can optimize their channel management strategy and accelerate revenue.

While each element of an effective channel plan is individually important, none are successful in silos. The elements of a high functioning channel plan are interrelated as they inform and influence one another.

Set the right goals

When contemplating a successful partner channel, the more partners the better, right? The more partners you have re-selling, the more revenue you and your company will enjoy.

Why more doesn’t always equal better

When it comes to your partner strategy, more is not necessarily better. At a certain point, the right kind of partner becomes more critical to the success of your channel than the quantity of partners.

Spur Reply recently worked on a project at a large software independent software vendor (ISV) that develops ERP and CRM solutions. The company wanted to adjust and refine its channel strategy, which was large, and through data analysis, it was clear that some trimming was necessary for two reasons: an unbalanced partner community and too many partners overall.

Creating balance in your partnership community

The right mix of large and small partners is an essential for a well-balanced channel program. Too many times, a customer would be best served by the right partner, but with a channel that is oversaturated with them, the perfect match doesn’t happen. Capacity planning and economic modeling can help you look beyond just the sticker price on a partner relationship.

Efficiently supporting your partners

Every partner, regardless of size, quality, or ambition, needs support. Whether it’s incident response, training, or marketing, partners management requires budget, and partners not driving revenue can easily eat up your support allocations. Plus, if your channel is oversaturated, you can end up with too many partners chasing a limited number of customers. Avoid having so many partners that it limits your return.

Benchmark your channel efforts against your direct sales

Both direct and indirect sales are essential elements of your go-to-market effort. Channel leaders must never forget the most important reason for an indirect sales motion is scale. You have partners because they help you win customers, drive sales, and enter markets where you wouldn’t otherwise have the presence or meet the cost structure.

In an age where new products are hitting the marketplace at an unprecedented rate, companies are tasked with the challenge of developing strategies to find the right partners to sell the right products at the right time. You can optimize channel revenue and profitability with a robust understanding of the stage of your product in the growth cycle.

However, before you can develop a channel strategy based on your product growth profile, you’ll need to understand the elements of the growth cycle and how each one influences channel decision making.

What is Product Growth Mapping?

Spur Reply has developed a proven system for product growth mapping called the Growth Profile Strategic Model. The model is built upon the idea that products fall into one of four quadrants: Incubate, Optimize, Perform, and Transform. The model helps you map your product priorities to your sales and partner performance in a quantifiable manner and optimize profitability for each product.

The axes of the graph you’ll create are labeled “Percentage of Total Revenue” (Y-Axis) and “Percentage Growth” (X-Axis). The elements of the graph and their descriptions are displayed on the grid in the following order:

Incubate – Break into new markets and technology by focusing on research and development efforts with a new or existing channel or direct resources (bottom left quadrant).

Optimize – Maintain sales with programmatic reductions by redirecting resources from low-performing elements to higher-performing elements to increase efficiency and effectiveness (bottom left quadrant).

Perform – Maximize sales and current revenue flow with existing partners and direct sales resources (top left quadrant).

Transform – Strengthen to scale or achieve performance leadership by recruiting new partners or adding additional direct sales resources (top right quadrant).

Thresholds to determine when products move from one quadrant to another are set based on company size, product offerings in the market, and the amount of revenue each product drives. A company with one great product bringing in most of the revenue may set their percentage of revenue threshold at 5% so that it will include more than one product. On the contrary, a company with several extensive offerings may set their threshold for this axis at 10% or 15%.

For this example, let’s say for a company the percentage of revenue threshold is 10%, and the percentage growth threshold is 5%. A product in the incubate phase is growing at a steady rate but does not yet make up more than 10% of the company’s total revenue. Products in the transform quadrant are those that drive more than 10 percent of the company’s revenue and are experiencing growth higher than the threshold of 5%. Performing products are typically great products already at scale, accounting for greater than 10 percent of total revenue, but the growth has plateaued and is below the 5% threshold. Products in the optimize quadrant are being phased out because they are not growing enough and make up less than 10% of revenue.

Now that you have a good grasp of the model, we can look at how this influences the channel strategy for each product.

Why is Product Growth Mapping important?

Having a clear understanding of your growth profile is essential. It quickly helps you determine how to recruit, grow, develop, or prune your direct and partner sales base and invest in each product in the most efficient manner.

An important piece of context is that growing sales through partners means you need to use one or more of these strategies:

Convince current partners selling a different product begin selling a new product

Leverage current partners sell more of that same product

Recruit entirely new partners who have never worked with you begin selling a new product

Every partner growth strategy uses these three significant engines, so keep them in mind as you choose partners to sell your products.

How Product Growth Mapping affects partner choice

Within each quadrant — and the corresponding growth cycle phase — there are typical partners that sell products in each.

Starting in the incubate stage, the chances of recruiting new partners to sell relatively new products is slim to none. You don’t know them, they don’t know you, and chances are they aren’t overly familiar with the product. Instead, you will likely leverage partners you have worked with before and who you have an existing relationship. These partners often have a low-risk profile and have experience selling innovative products in an unproven marketplace.

In the transform quadrant, we see a completely different story. Now we rely on all three partner growth engines to sell a product. Current partners start to sell more of what they traditionally sold. Other partners are willing and excited sell a new product, and new companies from an entirely different space or an adjacent space view this as an attractive opportunity and jump in to sell the new product.

In the perform stage the product has reached maturation, and very few new partners are coming on because the market is already developed. The only exception is if the partner is a laggard in the marketplace, and this is the strategy they have adopted for this product. The focus here is to keep current partners selling, if possible, to stave off a deceleration of sales.

Once a product reaches the optimize quadrant, the strategy is to figure out how to pull back investment and roll partners off that product.

Also, channel managers need an investment model for each phase of the growth cycle. Most funds dedicated to product marketing should be focused on products in the incubate stage, even though they are bringing in little or no revenue as they ramp up. This money can be spent incenting partners or developing a joint venture to decrease the risk of selling a new, unproven product.

As you move through the model to transform and perform, you spend less money in each stage to fuel product growth because the products mature and gain traction in the market. As the product reaches the optimize quadrant, you want to invest as little as possible to keep the product afloat and devote resources toward the end of life milestones and rolling partners off that product. Having a consistent mathematical model that drives the investment strategy for the growth cycle is equally as important as having a sound partner engagement strategy in place.

Common mistakes to avoid

When developing investment and partner engagement strategies for different stages of the growth model, we often see two significant mistakes: selling a product before it’s ready to move from perform to optimize stage and developing an investment model based on the traditional cost-of-sale model.

The first mistake is incenting partners to sell a new product before a product is ready to move from the perform stage to the optimize stage. We often see new products cannibalize old ones, and sales of the old product are cut short because partners begin to focus all of their attention selling a new and exciting product. A vendor must be careful with their launch and incentive strategies to avoid this partner behavior.

The second major mistake we see is companies developing an investment model based on a traditional cost-of-sale model. Companies will spend their product marketing budget in the wrong quadrant, most often the perform quadrant, because it drives the most revenue. Instead, devote this budget towards a product in the incubate quadrant — even though the current revenue is low.

With technology changing so rapidly today, having a great product simply isn’t enough. You also need go-to-market efficiency and data-driven tools for managing partners and channel sales. Whether you are doing annual business planning or trying to determine your best partner strategy, knowing your growth profile is essential. You can quickly and efficiently assess which products are in the growth cycle and determine the right strategic balance to recruit, grow, develop, or prune your direct and partner sales base.

Roll it out to partners

Every business wants to accelerate its revenue, yet it’s a tough goal to reliably accomplish. Combining product advantage with go-to-market efficacy is the key to consistently achieving revenue acceleration.

You have a great product or solution but, in a market saturated with competition, you need an effective go-to-market and business plans to meet your goals.

How do you make planning valuable for both you and your partners?

The best partner business plans are mutually beneficial, helping both you and your partners to grow faster than your organic growth paths. To make sure the plans will deliver accelerated results, you’ll need to take a critical look at six areas of your business and answer the following questions:

• Partner Selection : Which partners will help me grow faster?
• Capacity Planning : Can I grow better through existing or new partners?
• Performance Measures : How can I confidently measure partner performance?
• Incentive Impact : Are my incentives rewarding or reflecting partner behavior?
• PAM/CDM Productivity : How can I drive more revenue, and higher partner satisfaction, with my field resources?
• Program Effectiveness : Do my programs make a difference with the right level of return?

Now that you have identified the necessary elements, it’s time to structure those them into a practical, adjustable plan. At Spur Reply, planning is a four-step process: assess, learn, plan, document.

Assess > Learn > Plan > Document

First, you need to set your goals and select your growth partners. It will require you to assess and analyze your partners’ growth profile. Specifically, you need to look at the difference between their organic growth and your desired growth for them. How can you get your partner’s growth up to a level that will reach or surpass your revenue goals?

Once you have your goals and growth partners set, you need to understand performance drivers and growth areas. Leverage the work you have already done for capacity planning and partner scoring to learn what you need from partners.

After you determine your most valuable partners, you can finally set up your plan . In this step, you will define business outcomes and partner commitment. A good business plan sets the right expectations by covering off on what the partner and vendor commit to across several components:

Partner Commitments

• Outcomes – What are the business results you both seek?
• Actions – What are the specific steps the partner will take to accomplish the desired outcomes?
• Pro Tip – We recommend not micromanaging the partner. Agree to business outcomes, allow partners to deviate as needed, and hold them accountable to their results and agreement.

Vendor Commitments

• Resources – Which staff, programs, and other tools will you provide to the partner?
• Investments – What incentives are you willing to offer partners with the right performance?
• Pro Tip – We recommend paying MDF slightly before partner actions to help drive capability and efficiency.

Now that you have your plan, you’ll need to document it and both of your commitments correctly, which involves sharing the plan and driving performance accountability. By sharing the business plan in this way allows all stakeholders to review the plans (the partner, the partner’s account manager, and whoever has corporate responsibility for outcomes).

As you go through the planning and documentation process, leverage the opportunity to make sure you understand your partners.

First, use your partner business plan to develop profiles for your partners by collecting information that allows you to benchmark future performance. Then, make sure you have set up a timeframe with performance milestones, specific outcomes, and investments based on rewarding performance against commitments and completion criteria.

With your partner planning process set up and documented, make sure to track your performance against the 5Cs in your Quarterly Business Reviews (QBRs). Whether under, at, or exceeding goals, determine if you need to adjust the plan, reset the goals, or reallocate the investments.

No matter how developed your channel partner ecosystem, creating robust partner business plans will improve the go-to-market efficacy and revenue acceleration of your product.

Richard Flynn

Related articles.

How to Write a Business Plan: Step-by-Step Guide + Examples

Noah Parsons

24 min. read

Updated March 18, 2024

Writing a business plan doesn’t have to be complicated. 

In this step-by-step guide, you’ll learn how to write a business plan that’s detailed enough to impress bankers and potential investors, while giving you the tools to start, run, and grow a successful business.

• The basics of business planning

If you’re reading this guide, then you already know why you need a business plan . 

You understand that planning helps you: 

• Raise money
• Grow strategically
• Keep your business on the right track 

As you start to write your plan, it’s useful to zoom out and remember what a business plan is .

At its core, a business plan is an overview of the products and services you sell, and the customers that you sell to. It explains your business strategy: how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

Most business plans also include financial forecasts for the future. These set sales goals, budget for expenses, and predict profits and cash flow. 

A good business plan is much more than just a document that you write once and forget about. It’s also a guide that helps you outline and achieve your goals. 

After completing your plan, you can use it as a management tool to track your progress toward your goals. Updating and adjusting your forecasts and budgets as you go is one of the most important steps you can take to run a healthier, smarter business. 

We’ll dive into how to use your plan later in this article.

There are many different types of plans , but we’ll go over the most common type here, which includes everything you need for an investor-ready plan. However, if you’re just starting out and are looking for something simpler—I recommend starting with a one-page business plan . It’s faster and easier to create. 

It’s also the perfect place to start if you’re just figuring out your idea, or need a simple strategic plan to use inside your business.

Dig deeper : How to write a one-page business plan

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• What to include in your business plan

Executive summary

The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally just one to two pages. Most people write it last because it’s a summary of the complete business plan.

Ideally, the executive summary can act as a stand-alone document that covers the highlights of your detailed plan. 

In fact, it’s common for investors to ask only for the executive summary when evaluating your business. If they like what they see in the executive summary, they’ll often follow up with a request for a complete plan, a pitch presentation , or more in-depth financial forecasts .

Your executive summary should include:

• A summary of the problem you are solving
• A description of your product or service
• An overview of your target market
• A brief description of your team
• A summary of your financials
• Your funding requirements (if you are raising money)

Dig Deeper: How to write an effective executive summary

Products and services description

This is where you describe exactly what you’re selling, and how it solves a problem for your target market. The best way to organize this part of your plan is to start by describing the problem that exists for your customers. After that, you can describe how you plan to solve that problem with your product or service. 

This is usually called a problem and solution statement .

To truly showcase the value of your products and services, you need to craft a compelling narrative around your offerings. How will your product or service transform your customers’ lives or jobs? A strong narrative will draw in your readers.

This is also the part of the business plan to discuss any competitive advantages you may have, like specific intellectual property or patents that protect your product. If you have any initial sales, contracts, or other evidence that your product or service is likely to sell, include that information as well. It will show that your idea has traction , which can help convince readers that your plan has a high chance of success.

Market analysis

Your target market is a description of the type of people that you plan to sell to. You might even have multiple target markets, depending on your business. 

A market analysis is the part of your plan where you bring together all of the information you know about your target market. Basically, it’s a thorough description of who your customers are and why they need what you’re selling. You’ll also include information about the growth of your market and your industry .

Try to be as specific as possible when you describe your market. 

Include information such as age, income level, and location—these are what’s called “demographics.” If you can, also describe your market’s interests and habits as they relate to your business—these are “psychographics.” 

Related: Target market examples

Essentially, you want to include any knowledge you have about your customers that is relevant to how your product or service is right for them. With a solid target market, it will be easier to create a sales and marketing plan that will reach your customers. That’s because you know who they are, what they like to do, and the best ways to reach them.

Next, provide any additional information you have about your market. 

What is the size of your market ? Is the market growing or shrinking? Ideally, you’ll want to demonstrate that your market is growing over time, and also explain how your business is positioned to take advantage of any expected changes in your industry.

Dig Deeper: Learn how to write a market analysis

Competitive analysis

Part of defining your business opportunity is determining what your competitive advantage is. To do this effectively, you need to know as much about your competitors as your target customers. 

Every business has some form of competition. If you don’t think you have competitors, then explore what alternatives there are in the market for your product or service. 

For example: In the early years of cars, their main competition was horses. For social media, the early competition was reading books, watching TV, and talking on the phone.

A good competitive analysis fully lays out the competitive landscape and then explains how your business is different. Maybe your products are better made, or cheaper, or your customer service is superior. Maybe your competitive advantage is your location – a wide variety of factors can ultimately give you an advantage.

Dig Deeper: How to write a competitive analysis for your business plan

Marketing and sales plan

The marketing and sales plan covers how you will position your product or service in the market, the marketing channels and messaging you will use, and your sales tactics. 

The best place to start with a marketing plan is with a positioning statement . 

This explains how your business fits into the overall market, and how you will explain the advantages of your product or service to customers. You’ll use the information from your competitive analysis to help you with your positioning. 

For example: You might position your company as the premium, most expensive but the highest quality option in the market. Or your positioning might focus on being locally owned and that shoppers support the local economy by buying your products.

Once you understand your positioning, you’ll bring this together with the information about your target market to create your marketing strategy . 

This is how you plan to communicate your message to potential customers. Depending on who your customers are and how they purchase products like yours, you might use many different strategies, from social media advertising to creating a podcast. Your marketing plan is all about how your customers discover who you are and why they should consider your products and services. 

While your marketing plan is about reaching your customers—your sales plan will describe the actual sales process once a customer has decided that they’re interested in what you have to offer. 

If your business requires salespeople and a long sales process, describe that in this section. If your customers can “self-serve” and just make purchases quickly on your website, describe that process. 

A good sales plan picks up where your marketing plan leaves off. The marketing plan brings customers in the door and the sales plan is how you close the deal.

Together, these specific plans paint a picture of how you will connect with your target audience, and how you will turn them into paying customers.

Dig deeper: What to include in your sales and marketing plan

Business operations

The operations section describes the necessary requirements for your business to run smoothly. It’s where you talk about how your business works and what day-to-day operations look like. 

Depending on how your business is structured, your operations plan may include elements of the business like:

• Supply chain management
• Manufacturing processes
• Equipment and technology
• Distribution

Some businesses distribute their products and reach their customers through large retailers like Amazon.com, Walmart, Target, and grocery store chains. 

These businesses should review how this part of their business works. The plan should discuss the logistics and costs of getting products onto store shelves and any potential hurdles the business may have to overcome.

If your business is much simpler than this, that’s OK. This section of your business plan can be either extremely short or more detailed, depending on the type of business you are building.

For businesses selling services, such as physical therapy or online software, you can use this section to describe the technology you’ll leverage, what goes into your service, and who you will partner with to deliver your services.

Dig Deeper: Learn how to write the operations chapter of your plan

Key milestones and metrics

Although it’s not required to complete your business plan, mapping out key business milestones and the metrics can be incredibly useful for measuring your success.

Good milestones clearly lay out the parameters of the task and set expectations for their execution. You’ll want to include:

• A description of each task
• The proposed due date
• Who is responsible for each task

If you have a budget, you can include projected costs to hit each milestone. You don’t need extensive project planning in this section—just list key milestones you want to hit and when you plan to hit them. This is your overall business roadmap. 

Possible milestones might be:

• Website launch date
• Store or office opening date
• First significant sales
• Break even date
• Business licenses and approvals

You should also discuss the key numbers you will track to determine your success. Some common metrics worth tracking include:

• Conversion rates
• Customer acquisition costs
• Profit per customer
• Repeat purchases

It’s perfectly fine to start with just a few metrics and grow the number you are tracking over time. You also may find that some metrics simply aren’t relevant to your business and can narrow down what you’re tracking.

Dig Deeper: How to use milestones in your business plan

Organization and management team

Investors don’t just look for great ideas—they want to find great teams. Use this chapter to describe your current team and who you need to hire . You should also provide a quick overview of your location and history if you’re already up and running.

Briefly highlight the relevant experiences of each key team member in the company. It’s important to make the case for why yours is the right team to turn an idea into a reality. 

Do they have the right industry experience and background? Have members of the team had entrepreneurial successes before? 

If you still need to hire key team members, that’s OK. Just note those gaps in this section.

Your company overview should also include a summary of your company’s current business structure . The most common business structures include:

• Sole proprietor
• Partnership

Be sure to provide an overview of how the business is owned as well. Does each business partner own an equal portion of the business? How is ownership divided? 

Potential lenders and investors will want to know the structure of the business before they will consider a loan or investment.

Dig Deeper: How to write about your company structure and team

Financial plan

Last, but certainly not least, is your financial plan chapter. 

Entrepreneurs often find this section the most daunting. But, business financials for most startups are less complicated than you think, and a business degree is certainly not required to build a solid financial forecast. 

A typical financial forecast in a business plan includes the following:

• Sales forecast : An estimate of the sales expected over a given period. You’ll break down your forecast into the key revenue streams that you expect to have.
• Expense budget : Your planned spending such as personnel costs , marketing expenses, and taxes.
• Profit & Loss : Brings together your sales and expenses and helps you calculate planned profits.
• Cash Flow : Shows how cash moves into and out of your business. It can predict how much cash you’ll have on hand at any given point in the future.
• Balance Sheet : A list of the assets, liabilities, and equity in your company. In short, it provides an overview of the financial health of your business. 

A strong business plan will include a description of assumptions about the future, and potential risks that could impact the financial plan. Including those will be especially important if you’re writing a business plan to pursue a loan or other investment.

Dig Deeper: How to create financial forecasts and budgets

This is the place for additional data, charts, or other information that supports your plan.

Including an appendix can significantly enhance the credibility of your plan by showing readers that you’ve thoroughly considered the details of your business idea, and are backing your ideas up with solid data.

Just remember that the information in the appendix is meant to be supplementary. Your business plan should stand on its own, even if the reader skips this section.

Dig Deeper : What to include in your business plan appendix

Optional: Business plan cover page

Adding a business plan cover page can make your plan, and by extension your business, seem more professional in the eyes of potential investors, lenders, and partners. It serves as the introduction to your document and provides necessary contact information for stakeholders to reference.

Your cover page should be simple and include:

• Company logo
• Business name
• Value proposition (optional)
• Business plan title
• Completion and/or update date
• Address and contact information
• Confidentiality statement

Just remember, the cover page is optional. If you decide to include it, keep it very simple and only spend a short amount of time putting it together.

Dig Deeper: How to create a business plan cover page

How to use AI to help write your business plan

Generative AI tools such as ChatGPT can speed up the business plan writing process and help you think through concepts like market segmentation and competition. These tools are especially useful for taking ideas that you provide and converting them into polished text for your business plan.

The best way to use AI for your business plan is to leverage it as a collaborator , not a replacement for human creative thinking and ingenuity. 

AI can come up with lots of ideas and act as a brainstorming partner. It’s up to you to filter through those ideas and figure out which ones are realistic enough to resonate with your customers. 

There are pros and cons of using AI to help with your business plan . So, spend some time understanding how it can be most helpful before just outsourcing the job to AI.

Learn more: 10 AI prompts you need to write a business plan

• Writing tips and strategies

To help streamline the business plan writing process, here are a few tips and key questions to answer to make sure you get the most out of your plan and avoid common mistakes .  

Determine why you are writing a business plan

Knowing why you are writing a business plan will determine your approach to your planning project. 

For example: If you are writing a business plan for yourself, or just to use inside your own business , you can probably skip the section about your team and organizational structure. 

If you’re raising money, you’ll want to spend more time explaining why you’re looking to raise the funds and exactly how you will use them.

Regardless of how you intend to use your business plan , think about why you are writing and what you’re trying to get out of the process before you begin.

Keep things concise

Probably the most important tip is to keep your business plan short and simple. There are no prizes for long business plans . The longer your plan is, the less likely people are to read it. 

So focus on trimming things down to the essentials your readers need to know. Skip the extended, wordy descriptions and instead focus on creating a plan that is easy to read —using bullets and short sentences whenever possible.

Have someone review your business plan

Writing a business plan in a vacuum is never a good idea. Sometimes it’s helpful to zoom out and check if your plan makes sense to someone else. You also want to make sure that it’s easy to read and understand.

Don’t wait until your plan is “done” to get a second look. Start sharing your plan early, and find out from readers what questions your plan leaves unanswered. This early review cycle will help you spot shortcomings in your plan and address them quickly, rather than finding out about them right before you present your plan to a lender or investor.

If you need a more detailed review, you may want to explore hiring a professional plan writer to thoroughly examine it.

Use a free business plan template and business plan examples to get started

Knowing what information you need to cover in a business plan sometimes isn’t quite enough. If you’re struggling to get started or need additional guidance, it may be worth using a business plan template. 

If you’re looking for a free downloadable business plan template to get you started, download the template used by more than 1 million businesses. 

Or, if you just want to see what a completed business plan looks like, check out our library of over 550 free business plan examples . 

We even have a growing list of industry business planning guides with tips for what to focus on depending on your business type.

Common pitfalls and how to avoid them

It’s easy to make mistakes when you’re writing your business plan. Some entrepreneurs get sucked into the writing and research process, and don’t focus enough on actually getting their business started. 

Here are a few common mistakes and how to avoid them:

Not talking to your customers : This is one of the most common mistakes. It’s easy to assume that your product or service is something that people want. Before you invest too much in your business and too much in the planning process, make sure you talk to your prospective customers and have a good understanding of their needs.

• Overly optimistic sales and profit forecasts: By nature, entrepreneurs are optimistic about the future. But it’s good to temper that optimism a little when you’re planning, and make sure your forecasts are grounded in reality. 
• Spending too much time planning: Yes, planning is crucial. But you also need to get out and talk to customers, build prototypes of your product and figure out if there’s a market for your idea. Make sure to balance planning with building.
• Not revising the plan: Planning is useful, but nothing ever goes exactly as planned. As you learn more about what’s working and what’s not—revise your plan, your budgets, and your revenue forecast. Doing so will provide a more realistic picture of where your business is going, and what your financial needs will be moving forward.
• Not using the plan to manage your business: A good business plan is a management tool. Don’t just write it and put it on the shelf to collect dust – use it to track your progress and help you reach your goals.
• Presenting your business plan

The planning process forces you to think through every aspect of your business and answer questions that you may not have thought of. That’s the real benefit of writing a business plan – the knowledge you gain about your business that you may not have been able to discover otherwise.

With all of this knowledge, you’re well prepared to convert your business plan into a pitch presentation to present your ideas. 

A pitch presentation is a summary of your plan, just hitting the highlights and key points. It’s the best way to present your business plan to investors and team members.

Dig Deeper: Learn what key slides should be included in your pitch deck

Use your business plan to manage your business

One of the biggest benefits of planning is that it gives you a tool to manage your business better. With a revenue forecast, expense budget, and projected cash flow, you know your targets and where you are headed.

And yet, nothing ever goes exactly as planned – it’s the nature of business.

That’s where using your plan as a management tool comes in. The key to leveraging it for your business is to review it periodically and compare your forecasts and projections to your actual results.

Start by setting up a regular time to review the plan – a monthly review is a good starting point. During this review, answer questions like:

• Did you meet your sales goals?
• Is spending following your budget?
• Has anything gone differently than what you expected?

Now that you see whether you’re meeting your goals or are off track, you can make adjustments and set new targets. 

Maybe you’re exceeding your sales goals and should set new, more aggressive goals. In that case, maybe you should also explore more spending or hiring more employees. 

Or maybe expenses are rising faster than you projected. If that’s the case, you would need to look at where you can cut costs.

A plan, and a method for comparing your plan to your actual results , is the tool you need to steer your business toward success.

Learn More: How to run a regular plan review

Free business plan templates and examples

Kickstart your business plan writing with one of our free business plan templates or recommended tools.

Free business plan template

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One-page plan template

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How to write a business plan FAQ

What is a business plan?

A document that describes your business , the products and services you sell, and the customers that you sell to. It explains your business strategy, how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

What are the benefits of a business plan?

A business plan helps you understand where you want to go with your business and what it will take to get there. It reduces your overall risk, helps you uncover your business’s potential, attracts investors, and identifies areas for growth.

Having a business plan ultimately makes you more confident as a business owner and more likely to succeed for a longer period of time.

What are the 7 steps of a business plan?

The seven steps to writing a business plan include:

• Write a brief executive summary
• Describe your products and services.
• Conduct market research and compile data into a cohesive market analysis.
• Describe your marketing and sales strategy.
• Outline your organizational structure and management team.
• Develop financial projections for sales, revenue, and cash flow.
• Add any additional documents to your appendix.

What are the 5 most common business plan mistakes?

There are plenty of mistakes that can be made when writing a business plan. However, these are the 5 most common that you should do your best to avoid:

• 1. Not taking the planning process seriously.
• Having unrealistic financial projections or incomplete financial information.
• Inconsistent information or simple mistakes.
• Failing to establish a sound business model.
• Not having a defined purpose for your business plan.

What questions should be answered in a business plan?

Writing a business plan is all about asking yourself questions about your business and being able to answer them through the planning process. You’ll likely be asking dozens and dozens of questions for each section of your plan.

However, these are the key questions you should ask and answer with your business plan:

• How will your business make money?
• Is there a need for your product or service?
• Who are your customers?
• How are you different from the competition?
• How will you reach your customers?
• How will you measure success?

How long should a business plan be?

The length of your business plan fully depends on what you intend to do with it. From the SBA and traditional lender point of view, a business plan needs to be whatever length necessary to fully explain your business. This means that you prove the viability of your business, show that you understand the market, and have a detailed strategy in place.

If you intend to use your business plan for internal management purposes, you don’t necessarily need a full 25-50 page business plan. Instead, you can start with a one-page plan to get all of the necessary information in place.

What are the different types of business plans?

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. Here are a few common business plan types worth considering.

Traditional business plan: The tried-and-true traditional business plan is a formal document meant to be used when applying for funding or pitching to investors. This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix.

Business model canvas: The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea.

One-page business plan: This format is a simplified version of the traditional plan that focuses on the core aspects of your business. You’ll typically stick with bullet points and single sentences. It’s most useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.

Lean Plan: The Lean Plan is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance. It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.

What’s the difference between a business plan and a strategic plan?

A business plan covers the “who” and “what” of your business. It explains what your business is doing right now and how it functions. The strategic plan explores long-term goals and explains “how” the business will get there. It encourages you to look more intently toward the future and how you will achieve your vision.

However, when approached correctly, your business plan can actually function as a strategic plan as well. If kept lean, you can define your business, outline strategic steps, and track ongoing operations all with a single plan.

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

Table of Contents

• Use AI to help write your plan
• Common planning mistakes
• Manage with your business plan
• Templates and examples

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Navigating Business Partnerships: Your Comprehensive Guide to Success

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Deciding on a legal business structure is a critical first step when starting a new company. It impacts everything – from how you report income and your level of personal liability to compliance with legal obligations at all governmental levels.

For many, forming a business partnership is a strategic move. Partnerships can offer a synergy of expertise and resources, creating a collective capability greater than the sum of its parts. Unlike an LLC, a partnership implies that the business is conducted by individuals who share the management and profits.

What is a partnership?

A partnership is when two or more people or groups agree to run a business together. Each partner shares in the profits, losses, and business decisions. Partnerships can be formed between individuals, businesses, or organizations – anyone who wants to work together to make a profit and move forward with shared goals. Simply put, it's a team running a business, sharing the ups, downs, and responsibilities.

Once you’ve formed a partnership, it’s pivotal to clearly and legally document the understandings and expectations between partners. This step ensures a smoother business operation and helps prevent potential disputes. This brings us to another crucial term – the partnership agreement , which outlines the detailed terms and conditions among partners.

What is a partnership agreement?

A partnership agreement is a contract between business partners. It answers: Who owns what? Who does what? How will profits (and losses) be shared? It also sets the rules for solving disagreements and explains what happens if a partner leaves or passes away. It's a safety net, ensuring everyone knows the plan and preventing future disputes.

In my nearly 30 years as an attorney, entrepreneur, and advisor, I have navigated the nuances of different business structures, often evaluating the unique benefits and challenges of forming a partnership. And as an attorney, I’ve drafted hundreds of partnership agreements for various ventures. And I was a partner in numerous legal partnerships (which historically had to be structured as partnerships). This guide is your roadmap, with practical advice, actionable tips, and best practices from mentoring hundreds of entrepreneurs and small businesses and helping thousands start and expand their ventures.

Partnerships: A Comprehensive Guide

Types of business structures, benefits of forming a partnership, disadvantages of partnerships, types of partnerships, taxes and partnerships, how to start a partnership, partnership agreement: everything you need to know, frequently asked questions about partnerships.

Before diving into the details, let’s look at the popular types of business structures :

Sole proprietorship: This business is owned and operated by a single individual. This person maintains complete control over the company but bears all the risk.

LLC (Limited Liability Company) : This business structure merges the characteristics of corporations, partnerships, and sole proprietorships. It provides limited liability protection to its owners or members.

Corporation : A corporation is a business entity legally separate from its owners or shareholders. It can sell shares of stock to raise capital, something a sole proprietorship or partnership can’t do.

Hire an expert to form your company and save time. Our trusted partners can help: Northwest ($39 + state fee) or Bizee ($199 + state fee) . We recommend Northwest. After evaluating the leading registration companies, Northwest stands out as our top choice due to its competitive pricing, exceptional customer support, and commitment to privacy. Pay just $39 + state fees and you'll get a free year of registered agent service, articles of organization, privacy, and client support from local experts.

Embarking on a business journey with a partner isn’t just about having company. It’s about combining strengths, sharing responsibilities, and multiplying resources to create a resilient, resourceful, and robust venture.

Forming a partnership can weave a safety net, enabling the business to take leaps with shared risk and blend diverse skills to brew innovation and stability. From shared financial responsibilities to melding distinct skills, a partnership opens up a world where mutual benefits are not just possible but are often amplified. Here are fifteen tangible benefits for people when choosing a partnership structure:

• Shared responsibility. Partnerships often result in shared responsibility, which can lessen individual load. If one partner is adept at digital marketing, they can focus on online promotions, while the other, perhaps skilled in operations, manages order fulfillment. In a retail shop, one partner could manage in-store operations while the other takes care of supplier relationships and inventory management.
• Diverse skill set. Partners often bring varied skills and expertise, enhancing the business’s capabilities. One partner could focus on website design and UX design, while the other manages content creation and customer service. One partner could specialize in sales and customer interaction on the shop floor, while the other could focus on back-end operations and stock management.
• Enhanced creativity. With more minds at work, partnerships often foster enhanced creativity and innovation and can help you develop the best business ideas . An online design store can have one partner focused on creating unique designs while the other ensures they are showcased innovatively on the platform. While one partner brings innovative culinary ideas to a restaurant, the other might introduce fresh, customer-engaging service strategies.
• Risk mitigation. Having a partner means risks, especially financial ones, are shared. Both partners share the financial burden if an e-commerce platform fails to perform as expected. In a physical store, if a new product line doesn’t sell as projected, both partners absorb the financial impact.
• More resources.  Partnerships can mean access to more resources, such as capital, clientele, and industry contacts. In an IT firm, one partner might bring in financial investments while the other brings a rich client database. In a consultancy , one partner may offer a spacious office for client meetings while the other brings in crucial industry contacts.
• Networking opportunities. More partners typically equate to a wider network, which can be leveraged for business growth. An online advertising agency can benefit from one partner’s digital influencer contacts while utilizing the other’s connection with ad platforms. In a real estate business , one partner’s connections with property dealers and the other’s links with advertising agencies can be beneficial.
• Improved decision-making. Different perspectives often lead to well-rounded decision-making. In a digital magazine, editorial and technical decisions can be balanced between partners with expertise in each field. In a bookstore, one partner might select the inventory based on literary knowledge, while the other ensures technological tools (like point-of-sale [POS] systems) are updated and efficient.
• Flexibility . Partnerships often provide flexibility in management and operations. In an e-learning platform, partners can manage course updates and student interactions alternately, ensuring continual operation even during vacations. In a clinic, partners can alternate their duty hours to provide consistent services without burnout.
• Tax benefits.  Partnerships can offer various tax benefits, depending on jurisdiction. An online consultancy might benefit from tax deductions available for partnerships in its operational domain. A manufacturing unit run as a partnership may avail of certain tax credits available in its location.
• Easier to form. Forming a partnership can often be less complex and requires fewer formalities, paperwork, and expenses. Two freelancers might combine services and form a partnership firm with minimal documentation. Two artisans might join to create and sell products in a shared physical space with less bureaucratic involvement.
• Boosted financial capability. A partnership can amplify a business’s financial prowess by pooling all partners’ monetary resources and creditworthiness. In a SaaS business , while one partner might inject direct capital, the other might facilitate a loan due to their robust credit history. A coffee shop partnership might see one partner contributing more towards initial capital while the other agrees to a higher profit-sharing ratio to balance the scales.
• Companionship and moral support.  A partner can offer emotional and moral support, making the entrepreneurial journey less isolating. When running an online retail store, partners can buoy each other during slow sales, brainstorm new strategies, and provide moral support. In a physical fitness center, when one partner feels disheartened due to challenging situations, the other can provide encouragement and shared resolve to navigate through.
• Client satisfaction.  With multiple partners, client needs can be addressed more comprehensively and responsively. A digital marketing firm can provide client services across varied time zones, with partners strategically located in different regions. A consulting firm with partners specialized in various domains can offer clients a one-stop solution, enhancing client satisfaction and retention.
• Flexibility in ownership transfer.  Partnerships generally facilitate smoother transitions in ownership compared to other business structures. In an online tutoring platform, a partner wishing to exit can transfer their ownership stake to the remaining partner or a new entity more fluidly. In a law firm, a retiring partner might transfer their stake to an existing partner or a new entrant, ensuring continued business operations without complex restructuring.
• Greater borrowing capacity.  Partnerships often have a larger borrowing capacity than sole proprietorships due to combined assets and credit. An e-commerce partnership might secure a more substantial loan to scale operations, utilizing the combined assets and collateral of the partners. A manufacturing business partnership could leverage partners’ combined creditworthiness to secure better borrowing terms for expansion or upgrading machinery.

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• How to Start a Business Checklist
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• Is an LLC Right for You?
• Starting a Sole Proprietorship
• Starting Business Partnerships
• Creating a Powerful Pitch Deck

Being tethered to another person or entity in business could mean conflicts, liability, and intricate financial management. Here are ten potential drawbacks of partnerships:

• Conflict in decision making. Decisions might be contested when more than one person is involved, and conflicts can arise. Two partners in an e-commerce platform might disagree on inventory purchasing decisions. Partners in a bookstore might have conflicts over which books to stock and promote. This is common in other types of entities, too. Over the years, I’ve had many conflicts with partners in partnerships, LLCs, and corporations. However, this is often legally more complicated in partnerships because they are often equal, and it’s not always clear who makes the final decision.
• Joint liability.  All partners share the burden of business debts and liabilities. All partners in a digital marketing agency may be liable for a debt incurred due to a failed campaign. In a restaurant business, partners are responsible for any debts accrued due to a failed event or investment.
• Profit sharing.  All profits have to be shared among partners, sometimes leading to discontent. Profits from a thriving online coaching platform must be distributed among all partners, potentially sparking disputes. Profits from a successful promotional event at a retail shop must be shared among partners, possibly igniting conflicts.
• Limited capital.  Raising funds can be limited to the personal funds or creditworthiness of the partners. An app development partnership may find difficulty scaling due to limited capital investment. Due to constrained capital, a dental practice partnership may struggle to expand to new locations.
• Business continuity.  Partnerships may face continuity issues due to the withdrawal or death of a partner. An online consultancy may face disruptions if a key partner departs unexpectedly. A partner’s sudden exit from a law firm could potentially destabilize client relationships and ongoing cases. I’ve seen this happen often at law firms and other professional partnerships.
• Diverse risk appetite. Partners might have different thresholds for risk, which can influence business strategies. A partner in a FinTech startup might be reluctant to explore a new, innovative, but risky feature, contrary to the other’s willingness. Partners in a construction business might disagree on taking up a large, potentially lucrative, but risky project.
• Limited expertise.  Limited to the partners’ skills and knowledge, some areas may lack expertise. A blogging platform run by content creators might lack technical optimization due to limited IT knowledge. A physiotherapy clinic may not optimize its marketing strategies due to a lack of marketing expertise among the partners.
• Shared losses.  All partners have to bear losses, which can impact personal finances. If an online retail business incurs losses, the personal savings of all partners may be impacted. In an event management partnership, a failed event could dent the personal financial health of all partners.
• Complicated exit strategy.  Exiting or dissolving a partnership can be complex and may affect business operations. Leaving or dissolving a partnership in a web development business might disrupt ongoing projects. A partner’s exit from a salon business might involve intricate valuation and division of assets.
• Customer trust. When a partner leaves or a partnership dissolves, it might erode customer trust and loyalty. In a SaaS business, customers might feel uncertain about the continuity and reliability of the service upon changes in partnership. Patrons of a local cafe might be skeptical about quality consistency if a well-known partner departs.

Recognizing these potential challenges allows prospective partners to tread wisely, crafting strategies that mitigate these risks and leveraging the benefits to navigate the potential hurdles of partnership businesses.

Partnerships are not a one-size-fits-all model. There are various forms, each bearing its distinct set of rules, liabilities, and operational methods:

General Partnership (GP)

All partners share equal rights, responsibilities, and liabilities in a general partnership.

Best for: Consulting firms, law practices, small retail businesses, and local service providers. Not ideal for: Ventures with unequal investment or involvement, high-risk businesses, and tech startups with substantial liability.

Limited Partnership (LP)

Some partners enjoy limited liability and are not involved in management, while others have unlimited liability and manage the business.

Best for: Real estate investment groups, film production companies, family businesses wanting to involve silent members, and venture capital firms. Not ideal for: Small businesses with active partners, technology companies, and businesses that require all partners to be involved in management.

Limited Liability Partnership (LLP)

All partners have limited liability and can be involved in business management.

Best for: Professional practices like law and accountancy firms (my law firms started as partnerships and converted to LLPs when state laws permitted this conversion), consulting businesses, medical practices, and design agencies. Not ideal for: Businesses desiring simplicity in structure, sole proprietorships, manufacturing businesses with high liability.

Joint Venture

Two entities come together for a specific project or a specified period.

Best for: Construction companies on a specific project, tech companies collaborating on a product, multinational business expansions, and research and development projects. Not ideal for: Ongoing, long-term businesses, small local businesses, independent entrepreneurs, and ventures requiring a singular brand identity.

Strategic Alliances

Businesses collaborate and form strategic partnerships for mutual benefit without forming a new entity.

Best for: Airlines sharing certain routes, e-commerce, and retail collaborations, tech companies sharing technology, and cross-promotional marketing campaigns. Not ideal for: Businesses desiring shared liability and responsibility, ventures that need a unified brand, and small businesses with limited resources.

Limited Liability Limited Partnership (LLLP)

A variation of the LP where even general partners can have limited liability.

Best for: Large investment projects, family estate planning, agricultural operations, and certain real estate investments. Not ideal for: Small scale businesses, tech startups, businesses with straightforward operational needs, and single-location service providers.

Depending on different businesses’ unique financial and operational configurations, partnership taxes could be either an ally or an adversary. While a partnership as a business entity does not pay taxes, the profits pass through to partners who report this income on their personal tax returns.

Businesses that benefit from partnership taxation

• Consulting firms. Shifting income among partners can optimize individual tax scenarios.
• Real estate investment groups. Using pass-through taxation to manage investment gains and losses effectively.
• Small local retailers. Capitalizing on simplicity and avoiding double taxation.
• Family businesses. Managing estate planning and wealth transfer with a flexible partnership structure.
• Law practices.  Mitigating liability and enjoying the flexibility of distributing profits.
• Freelance and creative agencies. Navigating varying incomes through beneficial income-splitting among partners.
• Joint ventures in research and development. Appropriating expenses and research credits optimally among entities.
• Professional practices (e.g., doctors, architects). Managing professional income with flexibility among partners.
• Craftsmanship businesses (e.g., boutique craft shops). Handling often fluctuating incomes and expenditures in a straightforward manner.
• Educational services. Distributing educational revenue and operating expenses effectively among partners.

Businesses potentially disadvantaged by partnership taxation

• High-tech startups. Potential challenges with investment funding and allocation of losses.
• Large-scale manufacturing businesses. The complexity in managing and allocating large expenses and revenues.
• Corporations with international operations. Navigating through international tax law and potential double taxation issues.
• Venture capital firms. Managing investor returns and extensive financial portfolios.
• E-commerce giants. Handling extensive online transactions, international sales, and VAT.
• Robust franchise operations. Distributing income and managing expenses across various entities.
• Large agricultural businesses. Allocating extensive operational costs and managing international trade.
• Biotech companies. Allocating extensive R&D expenses and managing investor relations.
• High-risk businesses (e.g., adventure tourism). Balancing high liability with the fiscal flexibility of a partnership.
• Companies with high capital expenditure (CAPEX) . Managing the allocation of significant CAPEX and related depreciation.

1. Choose a business name

Your partnership’s business name must embody your brand while adhering to your state’s regulations. Typically, it should be unique and not misleadingly imply that you’re a government agency or an unauthorized industry.

Brainstorm potential names and ensure they align with your brand message. Run a name check to confirm that no business in your state has claimed it. Also, check for available domain names to create a business website with the same name.

2. Draft a partnership agreement

This crucial document outlines how your partnership will function. Though not legally required in all jurisdictions, a partnership agreement can prevent future disputes.

Consider hiring a business attorney to draft the agreement. This document should cover, at minimum, the following topics:

• The distribution of profits and losses
• The roles and responsibilities of each partner
• The procedures for adding or removing partners
• The procedures for dispute resolution
• The protocol in the event of dissolution of the partnership

Be sure all partners sign the agreement. Doing so is crucial for mutual understanding and legal clarity. The process is hassle-free when you sign documents online .

We go into more detail below on the key terms of a partnership agreement and the pitfalls you should avoid.

3. Register your partnership

Your partnership must be registered with the appropriate state agency, often the Secretary of State.

Check with your state’s Secretary of State office or a legal advisor for the specifics in your area. In most cases, you’ll need to file a document known as a “Statement of Partnership Authority.” This document generally includes details about your business name, purpose, duration of the partnership, and information about each partner.

4. Obtain an EIN

An Employer Identification Number (EIN) is your partnership’s Social Security number. The IRS uses it to track your business’s tax obligations. Even if you don’t have employees, an EIN is usually necessary.

Apply for an EIN through the IRS website—it’s free and straightforward. After submitting your application, you will immediately receive your EIN. The IRS has a helpful checklist to help you decide whether you need an EIN to run your business.

5. Open a business bank account

A separate business bank account helps you keep your business finances separate from your personal finances, making tax time much easier. It also lends credibility to your business.

When opening a bank account, choose a bank that caters to small businesses. Prepare to provide your partnership agreement, EIN, and business registration documents.

6. Register to do business in other states (if necessary)

If your partnership will do business in states other than where you registered, you’ll likely need to register your business there.

Each state has different rules regarding what constitutes “doing business” in their jurisdiction. Consult with a legal advisor to understand whether this step is necessary. Registration usually involves filing a similar form to the one you filed with your home state and paying an additional fee.

7. Obtain necessary permits and licenses

Depending on your industry and location, your partnership may need specific business licenses or permits to operate legally.

Research federal, state, and local requirements and apply for necessary permits and licenses. You can use the U.S. Small Business Administration’s license and permits tool as a starting point.

By following these steps, you’ll ensure your partnership has a solid legal foundation, giving you peace of mind to focus on growing your business.

Embarking on a business journey with a partner requires trust, mutual goals, and a robust partnership agreement that stands the test of time and tribulations. Here are the vital components and the actionable strategies to bolster each item in a partnership agreement.

Ownership percentages

Clearly outline the specific percentages owned by each partner, avoiding generalized statements. Employ precise language and formulas to describe how ownership percentages might change in various scenarios.

Protect against: Discrepancies or disagreements about ownership due to vagueness or oversights in the document—lack of clear procedures for recalculating ownership percentages in the event of capital changes.

Profit and loss allocation

Define explicit mechanisms or formulas for allocating profits and losses among partners. Include clauses for exceptional circumstances, such as unexpected losses or extraordinary profits. Protect against: Conflict arising from perceived unfair distribution, especially in scenarios not covered in the agreement—legal challenges due to ambiguous or non-compliant profit and loss allocation methods.

Roles and responsibilities

Detail each partner’s duties, powers, and limitations, ensuring clarity and specificity. Establish mechanisms for adjusting roles and responsibilities as the business evolves. Protect against: Conflicts or inefficiencies due to overlapping or unclear roles. Legal or operational issues arising from failure to adhere to documented responsibilities.

Dispute resolution

Specify a detailed, step-by-step process for resolving internal disputes to avoid court battles. Incorporate a clause mandating mediation or arbitration before any legal action. Protect against: Ignoring minor disputes that could escalate into larger, more damaging conflicts—encountering a stalemate situation if the agreement is too vague or doesn’t cover a particular dispute.

Capital contributions

Clarify the initial contributions and any additional contributions required from partners. Outline procedures and conditions for raising additional capital in the future. Protect against: Financial stress due to unclear or insufficient capital contribution arrangements. Disagreements about valuation and equity when accepting additional capital contributions.

Decision-making protocols

Enumerate key decisions that require unanimous consent and those that can be made individually. Develop a system or voting mechanism for making collective decisions. Protect against: Experiencing delays or disruptions due to a lack of decision-making structures. Encountering dissension from partners who feel sidelined or overruled in the decision-making process.

Partner exit and succession planning

Define clear exit strategies, including buyout clauses and valuation methods. Implement a structured succession plan for seamless transitions during partner exits. Protect against: Fumbling business continuity during an unexpected exit or transition. Engaging in legal battles over partner exits due to poorly defined exit clauses.

Death or incapacity of a partner

Establish guidelines and procedures for managing the business interest of a partner who becomes incapacitated or passes away. Specify the rights of heirs or successors to a partner’s business interest. Protect against: Enduring business disruption and potential discord with heirs due to the absence of a clear plan. Navigating through legal complexity regarding inheritance and stakeholder rights without clear direction.

Non-compete and confidentiality clauses

Draft precise non-compete clauses defining the scope, duration, and geography to protect the business. Incorporate strict confidentiality clauses safeguarding business secrets and proprietary information. Protect against: Experiencing damage from a partner who engages in competing ventures or leaks sensitive information—facing legal challenges for enforcing overly restrictive or vague non-compete clauses.

Amendments to the agreement

Specify the process and any necessary approvals for amendments to the partnership agreement. Ensure flexibility while maintaining a structure that prevents arbitrary changes. Protect against: Encountering disagreements or legal issues due to inadequate procedures for making amendments and limiting the business’s adaptive capability by making the amendment process overly rigid or cumbersome.

Business sales and transfers

Define the conditions under which business assets or the entire business can be sold . Specify the partners’ rights, such as the right of first refusal, in the event of a proposed sale. Protect against: E ngaging in disputes over the validity of a sale or transfer of business shares. Encountering unexpected exits or entries of partners due to unscheduled sales or transfers.

Financial management and distribution

Clarify protocols for financial management, including budget approvals and financial reporting. Detail the procedures and schedules for distributing profits among partners. Protect against: Mismanagement of finances or inequitable distribution leading to internal conflicts—legal scrutiny or penalties due to non-compliance with financial management norms.

Admission of new partners

Describe the process, conditions, and any restrictions for admitting new partners. Specify any changes to existing partners’ equity, roles, and responsibilities when a new partner is admitted. Protect against: Disrupting business harmony due to the unsystematic admission of new partners and altering the equilibrium of control and influence among existing partners.

Resolution of violations

Develop a mechanism to handle violations of the agreement by partners. Include provisions for penalties, reparations, or corrective actions in the event of a violation. Protect against: Fostering a toxic environment by neglecting or ineffectively handling violations and engaging in legal battles stemming from unaddressed or improperly handled violations.

Dissolution procedures

Establish clear conditions under which the partnership can be dissolved. Detail the process for asset liquidation and debt clearance upon dissolution. Protect against: Encountering legal issues and conflicts during dissolution due to vague or incomplete procedures. Financial losses due to an unstructured or hurried dissolution process.

Remember, these items provide a comprehensive guide, but every business is unique. Tailor your partnership agreement to your specific needs, considering all possible future scenarios, and always consult a legal expert to ensure its solidity and enforceability.

How is a partnership formed?

A partnership is typically formed through a partnership agreement, which lays out all the partners' terms, responsibilities, and profit-sharing. It isn't mandatory by law but is crucial to avoid future disputes. Key steps include deciding on a business name, registering the business, obtaining necessary licenses and permits, and crafting a comprehensive partnership agreement.

What are the main types of partnerships?

Primarily, there are three types of partnerships: general partnerships, limited partnerships, and limited liability partnerships, each differing in terms of liability and management structure. A business might choose a type based on its operational, financial, and legal needs and objectives.

Are partners personally liable for business debts and obligations?

In general partnerships, partners are usually personally liable for business debts and obligations. However, in limited and limited liability partnerships, partners can limit their liability to the amount they have invested in the business.

How are partnerships taxed?

Partnerships themselves are not subject to income tax. Instead, their profits are passed to the partners, who report the business income or loss on their personal tax returns. Each partner's share of profits and losses, usually outlined in the partnership agreement, is reported to the IRS on a Schedule K-1.

How does a partnership agreement protect the partners?

A partnership agreement provides a clear framework regarding each partner's contributions, profit and loss distribution, and rules for resolving disputes, adding or changing partners, and dissolving the partnership. It is a safeguard, providing solutions and predetermined courses of action for various scenarios.

What happens if a partner wants to leave the partnership?

Departure scenarios should ideally be addressed in the partnership agreement. Depending on the terms, the leaving partner may sell their share to the remaining partners, to an outside party, or trigger the dissolution of the partnership. The specific processes and implications may vary based on the agreed-upon terms and type of partnership.

Can partnerships be formed without a written agreement?

Yes, partnerships can technically be formed without a written agreement through verbal agreements or the actions of a business's operators. However, a written partnership agreement is crucial to avoid potential disputes and clearly understand all partners' roles, responsibilities, and profit-sharing.

How are decision-making powers typically shared in a partnership?

Decision-making powers are usually shared based on the terms set in the partnership agreement. This can range from equal power for all partners to specified authority areas for each individual. Clearly defined roles and responsibilities can help streamline decision-making processes and prevent conflicts.

How is profit typically shared in a partnership?

The partnership agreement generally determines profit-sharing in a partnership. It could be shared equally or in proportion to each partner's investment in the business. Without an agreement, profits are shared equally among partners despite the level of investment or effort put into the business.

These questions serve as a starting point, providing a foundational understanding of partnerships and their nuances. Always seek advice from a professional specializing in business structures and partnerships for specific advice and strategic guidance.

Choosing a partnership can be an excellent decision for many entrepreneurs. Each business type has unique pros and cons. Therefore, evaluate your needs, seek professional advice, and make an informed decision.

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Improving the management of complex business partnerships

Partnerships never go out of style. Companies regularly seek partners with complementary capabilities to gain access to new markets and channels, share intellectual property or infrastructure, or reduce risk. The more complex the business environment becomes—for instance, as new technologies emerge or as innovation cycles get faster—the more such relationships make sense. And the better companies get at managing individual relationships, the more likely it is that they will become “partners of choice” and able to build entire portfolios of practical and value-creating partnerships.

Of course, the perennial problems associated with managing business partnerships don’t go away either—particularly as companies increasingly strike relationships with partners in different sectors and geographies. The last time we polled executives on their perceived risks for strategic partnerships, 1 Observations collected in McKinsey’s 2015 survey of more than 1,250 executives. Sixty-eight percent said they expect their organizations to increase the number of joint ventures or large partnerships they participate in over the next five years. A separate, follow-up survey in 2018 showed that 73 percent of participants expect their companies to increase the number of large partnerships they engage in. the main ones were: partners’ disagreements on the central objectives for the relationship, poor communication practices among partners, poor governance processes, and, when market or other circumstances change, partners’ inability to identify and quickly make the changes needed for the relationship to succeed (exhibit).

In our work helping executive teams set up and navigate complex partnerships, we have witnessed firsthand how these problems crop up, and we have observed the different ways companies deal with them . The reality is: successful partnerships don’t just happen. Strong partners set a clear foundation for business relationships and nurture them. They emphasize accountability within and across partner companies, and they use metrics to gauge success. And they are willing to change things up if needed. Focusing on these priorities can help partnerships thrive and create more value than they would otherwise.

Establish a clear foundation

It seems obvious that partner companies would strive to find common ground from the start—particularly in the case of large joint ventures in which each side has a big financial stake, or in partnerships in which there are extreme differences in cultures, communications, and expectations.

Yet, in a rush to complete the deal, discussions about common goals often get overlooked. This is especially true in strategic alliances within an industry, where everyone assumes that because they are operating in the same sector they are already on the same page. By skipping this step, companies increase the stress and tension placed on the partnership and reduce the odds of its success. For instance, the day-to-day operators end up receiving confusing guidance or conflicting priorities from partner organizations.

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How can the partners combat it? The individuals expected to lead day-to-day operations of the partnership, whether business-unit executives or alliance managers, should be part of negotiations at the outset. This happens less often than you think because business-development teams and lawyers are typically charged with hammering out the terms of the deal—the objectives, scope, and governance structure—while the operations piece often gets sorted out after the fact.

Transparency during negotiations is the only way to ensure that everyone understands the partners’ goals (whether their primary focus is on improving operations or launching a new strategy) and that everyone is using the same measures of success. Even more important, transparency encourages trust and collaboration among partners, which is especially important when you consider the number of executives across the organizations who will likely rotate in and out of leadership roles during the life of the relationship.

Inevitably, points of tension will emerge. For instance, companies often disagree on financial flows or decision rights. But we have seen partners articulate such differences during the negotiation period, find agreement on priorities, and reset timelines and milestones. They defused much of the tension up front, so when new wrinkles—such as market shifts and changes in partners’ strategies—did emerge, the companies were more easily able to avoid costly setbacks and delays in the business activities they were pursuing together.

Nurture the relationship

Even business relationships that start off solidly can erode, given individual biases and common communication and collaboration issues. There are several measures partners can take to avoid these traps.

Connect socially

If executives in the partner organizations actively look for opportunities to understand one another, good collaboration and communication at the operations level are likely to follow. Given time and geographic constraints, it can be hard for them to do so, but as one energy-sector executive who has negotiated and managed dozens of partnerships noted, “It’s important to spend as much time as you can on their turf.” He says about 30 to 40 percent of partnership meetings are about business; the rest of the time is spent building friendships and trust.

Keep everyone in the loop

Skipping the step of keeping everyone informed can create unnecessary confusion and rework for partner organizations. That is what happened in the case of an industrial joint venture: the first partner in the joint venture included a key business-unit leader in all venture-related discussions. The second partner apprised a key business-unit leader about major developments, but this individual did not actually join the discussions until late in the joint-venture negotiation. At that point, as he learned more about the agreement, he flagged several issues, including inconsistencies in the partners’ access to vendors and related data. He immediately recognized these issues because they directly affected operations in his division. Because he hadn’t been included in early discussions, however, the partners wasted time designing an operating model for the joint venture that would likely not work for one of them. They had to go back to the drawing board.

Recognize each other’s capabilities, cultures, and motivations

Partners come together to take advantage of complementary geographies, corresponding sales and marketing strengths, or compatibilities in other functional areas. But it is important to understand which partner is best at what . This process must start before the deal is completed—but cannot stop at signing. In the case of one consumer-goods joint venture, for instance, the two partner organizations felt confident in their plan to combine the manufacturing strength of one company with the sales and marketing strengths of the other. During their discussions on how to handle financial reporting, however, it became clear that the partner with sales and marketing strengths had a spike in forecasting, budgeting, and reporting expertise. The product team for the first partner had originally expected to manage these finance tasks, but both partner teams ultimately agreed that the second partner should take them on. In this way, they were able to enhance the joint venture’s ongoing operations and ensure its viability.

Equally important is understanding each partner’s motivation behind the deal. This is a common point of focus during early negotiations; it should continue to be discussed as part of day-to-day operations—particularly if there are secondary motivators, such as access to suppliers or transfer of capabilities, that are important to each partner. Within one energy-sector partnership, for instance, the nonoperating partner was keen to understand how its local workforce would receive training over the course of the partnership. This company wanted to enhance the skills of the local workforce to create more opportunities for long-term employment in the region. The operating partner incorporated training and skill-evaluation metrics in the venture’s quarterly updates, thus improving the companies’ communication on the topic and explicitly acknowledging the importance of this point to its partner.

Invest in tools, processes, and personnel

Bringing different business cultures together can be challenging, given partners’ varying communication styles and expectations. The good news is that there are a range of tools—among them, financial models, key performance indicators, playbooks, and portfolio reviews—companies can use to help bridge any gaps. And not all these interventions are technology dependent. Some companies simply standardize the format of partnership meetings and agendas so that teams know what to expect. Others follow stringent reporting requirements.

Another good move is to convene an alliance-management team. This group tracks and reviews the partnership’s progress against defined metrics and helps to spot potential areas of concern—ideally with enough time to change course. Such teams take different forms. One pharmaceutical company with dozens of commercial and research partnerships has a nine-member alliance-management team charged mostly with monitoring and flagging potential issues for business-unit leaders, so it consists of primarily junior members and one senior leader who interacts directly with partners. An energy company with four large-scale joint ventures has taken a different approach: its alliance-management team comprises four people, but each is an experienced business leader who can serve as a resource for the respective joint-venture-leadership teams.

Sometimes partnerships need a structural shake-up—and not just as an act of last resort.

How companies structure these teams depends on concrete factors—the number and complexity of the partnerships, for instance—as well as intangibles like executive support for alliances and joint ventures and the experiences and capabilities of the individuals who would make up the alliance-management team.

Emphasize accountability and metrics

Good governance is the linchpin for successful partnerships; as such, it is critical that senior executives from the partner organizations remain involved in oversight of the partnership. At the very least, each partner should assign a senior line executive from the company to be “deal sponsor”—someone who can keep operations leaders and alliance managers focused on priorities, advocate for resources when needed, and generally create an environment in which everyone can act with more confidence and coordination.

Additionally, the partners must define “success” for their operations teams: What metrics will they use to determine whether they have hit their goals, and how will they track them? Some companies have built responsibility matrices; others have used detailed process maps or project stage gates to clarify expectations, timelines, and critical performance measures. When partnerships are initially formed, it is usually the business-development teams that are responsible for building the case for the deal and identifying the value that may be created for both sides. As the partnership evolves, the operations teams must take over this task, but they will need ongoing guidance from senior leaders in the partner organizations.

Build a dynamic partnership

Sometimes partnerships need a structural shake-up—and not just as an act of last resort. For instance, it might be less critical to revisit the structure of a partnership in which both sides are focused on joint commercialization of complementary products than it would be for a partnership focused on the joint development of a set of new technologies. But there are some basic rules of thumb for considering changes in partnership structure.

Partner organizations must acknowledge that the scope of the relationship is likely to shift over time. This will be the case whether the partners are in a single- or multiasset venture, expect that services will be shared, anticipate expansion, or have any geographic, regulatory, or structural complexities. Accepting the inevitable will encourage partners to plan more carefully at the outset. For example, during negotiations, the partners in a pharmaceutical partnership determined that they had different views on future demand for drugs in development. This wasn’t a deal breaker, however. Instead, the partners designated a formula by which financial flows would be evaluated at specific intervals to address any changes in expected performance. This allowed the partners to adjust the partnership based on changes in market demand or the emergence of new products. All changes could be incorporated fairly into the financial splits of the partnership.

Avoiding blind spots in your next joint venture

Partners should also consider the potential for restructuring during the negotiation process—ideally framing the potential endgame for the relationship. What market shifts might occur, how might that affect both sides’ interests and incentives, and what mechanisms would allow for orderly restructuring? When one oil and gas joint venture began struggling, the joint-venture leader realized he was being pulled in opposing directions by the two partner companies because of the companies’ conflicting incentives. “It made the alliance completely unstable,” he told us. He brought the partners back to the negotiation table to determine how to reconcile these conflicting incentives, restructure their agreement, and continue the relationship, thus avoiding deep resentment and frustration on both sides of the deal.

Such dialogues about the partnership’s future, while potentially stressful, should be conducted regularly—at least annually.

The implementation of these four principles requires some forethought and care. Every relationship comes with its own idiosyncrasies, after all, depending on industry, geography, previous experience, and strategy. Managing relationships outside of developed markets, for instance, can present additional challenges involving local cultures, integration norms, and regulatory complexities. Even in these emerging-market deals, however, the principles can serve as effective prerequisites for initiating discussions about how to change long-standing practices and mind-sets.

An emphasis on clarity, proactive management, accountability, and agility can not only extend the life span of a partnership or joint venture but also help companies build the capability to establish more of them—and, in the process, create outsize value and productivity in their organizations.

Ruth De Backer is a partner in McKinsey’s New York office, where Eileen Kelly Rinaudo is a senior expert.

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How to Plan for Business Partnerships

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• Creating a Business Plan
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Active Partners Vs. Silent Partners

Disadvantages of an economic partnership agreement, partnership agreement issues.

• The Disadvantages of Two-Person Business Partnerships
• Can a Partner Close a Business Alone?

A general partnership can be thought of as a sole proprietorship for two or more people. Just as a sole proprietor is a single person running a business without the formality of incorporating, a partnership is a business run by two or more people who equally divide the risks and benefits of the business. Partnerships have some dangers in ongoing management, which can avoided with proper planning.

Draw up a mission statement for the business that is agreed to by all partners equally. The mission statement ensures that all partners are literally on the same page as to the goals of the business, and can help forestall debates over the company's future direction.

Develop an equitable means of reimbursing partners for their startup costs and investments. Partnerships pool startup capital to build their business, but frequently partners come to the table with different amounts of money. This can differ widely from the division of labor later in the business; therefore, make repayment of your initial investments, with appropriate returns on investment, part of your business plan, to avoid later disagreements over the value of startup capital vs. varying "sweat equity" of the partners later in the business.

Determine a method of resolving disputes between partners. Many partners are old friends, family members or spouses, and presume that these ties will prevent amicable resolution of disagreements; these partners may find that friendships, families and marriages can be wrecked by the stresses of running a business. Ideally, a partnership of an odd number people can resolve disputes by a democratic voting process; alternately, give some partners a "trump vote" in the areas of their expertise. A married couple, for example, may allocate financial management "trump votes" to one spouse, and marketing and sales planning to the other.

Appoint an outside ombudsman, or a panel of advisers, to resolve disputes which cannot be resolved internally. No matter how solid your resolution process appears to be on paper, your business will be in jeopardy if a business decision threatens to drive out a partner while she is still a key asset to the business. If you cannot resolve a problem internally, have trusted experts on hand to guide you through disputes.

Divide up the labor and management responsibilities of the partners, and determine exactly how each partner will be compensated for their effort. For example, a partnership may decide to divide all profits equally, but may pay salaried bonuses before profit calculations to some partners, to compensate them for workloads or responsibilities, which may be inequitably distributed.

Consult with outside experts after you have finished drawing up your partnership agreement, but before you begin operating under it. Your legal and accounting advisers may see issue areas you missed, or an experienced entrepreneur may be able to point out problems with your methods well in advance of problems that may arise.

• AllBusiness: Advantages and Disadvantages of General Partnerships

Ellis Davidson has been a self-employed Internet and technology consultant, entrepreneur and author since 1993. He has written a book about self-employment for recent college graduates and is a regular contributor to "Macworld" and the TidBITS technology newsletter. He is completing a book on self-employment options during a recession. Davidson holds a Bachelor of Arts in American civilization from the University of Pennsylvania.

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Business Plans for Lateral Partners – Good vs. Great

Most effective business plans, if not done correctly, are relatively useless.  Why?  Because many partners end up borrowing a template from a friend at another firm, and they just fill in the sections. 

There is not that much thought about why certain information is included, and how it fits with the LPQ and the overall business case for joining the new firm.  Effective business plans often read like a rehash of a partner’s website biography and contain duplicative information that will be included in other documents as part of the due diligence process. 

But effective business plans don’t have to be superfluous, and here are recommendations. 

There are three main questions partners have regarding effective business plans:

• “Should I have a effective business plan?”
• “If so, when should it be presented to the firm?”
• “What should the business plan include?”

Main Purpose of Business Plan  

Before I answer the above three questions about effective business plans and it’s important to explain that the purpose of a effective business plan is to show your future vision for your practice at a particular firm. 

Effective Business plans are used in conjunction with a Lateral Partner Questionnaire (LPQ), which is a detailed questionnaire that focuses on various aspects of your practice and includes questions about the historical, current, and projected financial aspects and economics of your practice.  Taken together, these provide firms with the most comprehensive 360 degree view of your practice and how it will potentially fit in to the new firm.  

In short :  The LPQ looks at your past and present practice, and also encompasses projections for the future.  Business plans supplement the LPQ by putting more “meat on the bones” about your current practice, where you want to go, and how you plan to get there.  The business plan is also, at times, a stand-alone document that can be used at the new firm to present to the executive/hiring committee to explain why you should be hired.  

Now let’s address each of the above three questions.

• “Should I have a business plan?” Answer: it depends.

If you have an immediately portable practice that is at least self-sustaining (meaning you can keep yourself busy with your own work), or the new firm has enough work to keep you busy based on your unique skillset, a business plan may not be needed.   The information that you include in the LPQ will likely be sufficient.

If it’s unclear as to whether you may have enough business to keep yourself busy, a business plan is important to help explain your vision and plan for your practice.   It’s a piece of the puzzle that helps the new firm answer, “What’s the likelihood this partner will be successful at our firm?” 

• “When should it be presented to a firm?”

Do not present a business plan before you are interviewing (the exception is if you are coming from the government). 

The business plan must be tailored to each specific firm you are considering, and you will learn important information during the interview process that you will use to help build your case as to why you and your practice is a good fit for the new firm. A big mistake is presenting a generic business plan.  I remember attending a seminar a few years ago on lateral partner business plans, and the speakers (hiring partners at law firms) basically said, “We don’t like generic business plans and think they are sort of useless.  If we actually want a business plan, it should be focused on our firm specifically.” 

Your business plan ideally connects these dots: (1) what the firm wants to accomplish, (2) what you want to accomplish, and (3) how coming together could help you both accomplish these mutual goals.  You are (obviously) unable to connect the dots if you have a generic business plan that is presented at the outset.  As a result, presenting it after a round or two of discussions will enable you to connect the dots much better. 

• “What information should it contain?”

The level of detail included in your business plan will depend upon your particular circumstances, where you are in the process, and what you wish to highlight.  Below are the most relevant sections that can be presented.   Think of this as a general lateral partner business plan template, which should be modified and tailored based on your specific situation. 

DETAILS TO INCLUDE IN THE BUSINESS PLAN

• Practice Description . Briefly describe nature of your practice, including areas of expertise or specialization; ideal to provide breakdowns (e.g., example 30% M&A, 25% private equity, etc.).
• Practice Development to Date : What you have done to develop your practice to date.  Although the LPQ will cover your business development track record, it doesn’t hurt to reiterate your main clients, origination track record over the past few years, and your billing rate. 
• Highlights/Accomplishments : Any highlights about your practice (e.g., particular high-profile deals or cases) and/or industry recognition.
• Firm Citizenship: Leadership roles, etc.
• Key Strengths : What are your unique strengths as a partner?  Where do you see yourself adding the most value to a new firm/practice? 
• Future Goals : Where you want your practice to be in the next 3-5 years.  For example, do you want to expand your practice area or enhance a particular industry focus?  Are there additional clients you want to pursue, but you are limited at your current firm due to conflicts, rates, or geography?
• Industry Trends : What industries do you focus on? What is happening in your particular industries that could create more opportunity at the new firm?  What are the untapped opportunities and how are you positioned to capitalize on them? 
• Limitations or Challenges with Current Firm (this is optional, depending on the particular circumstances of your situation) : Why are your future goals difficult to accomplish at your current firm?   Note: the challenges can also be “softer” factors such as the manner in which client credit is shared is not consistent with the type of culture in which you enjoy practicing, etc.  Be careful, however, not to come across as venting your frustrations.  The more this is focused on business and limitations to your practice, the better.
• Your understanding of the new firm’s goals/strategic needs as it pertains to your practice (based on your discussions).
• How your background/experience could fit into the firm’s goals/strategic needs.
• How the new firm could help you (1) more easily accomplish your goals and/or (2) reduce some of the challenges with your current firm. In short, how could both sides come together in a way that meets everyone’s needs.
• Your Network of Contacts : Include a list or chart of people you would plan to continue receiving business from, and who would you expect to approach to develop new business.  The ideal format for the headers is the name, company, title, and the nature of your relationship, including how long your have represented the client (if they are a current client).  This can include the new firm’s clients to the extent it has been discussed already.  If you do mention the new firm’s clients, be sure to take a collaborative tone that includes pitching together as a group and not as a lone wolf. Note :  Some partners are understandably reluctant to “share their rolodex” too early in the process.  If you are uncomfortable, it’s ok to hold off on providing too much detail regarding your network if it’s still early in the process and you are unsure if the firm is a fit.  If the firm presses you for information on your network and future prospects, you can equalize the process by asking the firm to share information on their main clients/contacts as well, so it’s more of a “mutual brainstorming.” 
• Specific Business Development/External-Facing Activities : Many business plans have generic sections such as “Writing:  I plan to write articles” or “Speaking:  I plan to speak at industry conferences to help get my and the firm’s name out there.”  There is nothing wrong with this, but it often comes across as very generic.  To make more of an impact, provide specific examples of what you have done to date, and what you plan to continue doing.  For example, are you on the Board of any high-profile publications or do you often participate at certain industry conferences?

The business plan is not a one-size-fits all approach, but the above provides more clarity on the key issues these documents involve and how to best approach this part of the lateral hiring process. 

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Author: Dan Binstock

Dan co-owns Garrison & Sisson, where he focuses on lateral partner and practice group placements. He has consistently been recognized as one of the Top 100 Global Legal Strategists and Consultants by LawDragon, and authored "The Attorney's Guide to Using (or Not Using) Legal Recruiters." Dan is the Immediate Past President of the National Association of Legal Search Consultants (NALSC), where he also served as Chair of the Ethics Committee. Visit here to learn more about Dan, or contact him confidentially with any questions at (202) 559-0492 or [email protected].

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How to Find a Business Partner Online

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There's no doubt that starting a small business can be a time-consuming and demanding process—especially if you're doing it all on your own. For this—among other reasons—you may decide to work with a partner to start your business.

Finding the right business partner, however, is essential. After all, this individual will be the person you trust to help you manage your finances, make important decisions, and run your day-to-day business operations. So, whether you haven't had luck finding a partner through more traditional channels or you're simply looking to streamline your search process, you might be wondering: Should you start a business with someone you met online?

In short, the answer is yes—as long as you approach the process carefully—and we're here to help. In this guide, we'll explain how to find a business partner online with tips from experienced entrepreneurs, as well as review the best websites to use to start your search.

How to find a business partner online in 9 steps

When you're trying to find a business partner online, you can follow these nine steps to get started:

1. Solidify your business idea.

Before you bring a co-founder on board, you’ll need to ensure that you have a clear, developed small business idea.

If you're still working out details and are hoping to meet a partner who can help draft a business plan, you'll need to make this clear and upfront in your search. Wherever you are in the development process, put your most updated plan in writing so you can present a snapshot to serious partner candidates.

How much do you need?

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We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

2. Define what you're looking for in a business partner.

The kind of partner you’re looking for largely depends on the kind of business owner you are, in addition to your anticipated business needs. For instance, a seasoned business owner might seek a technical expert to take charge of product development for their new company; a first-time entrepreneur may have the expertise to start a business but need a partner with management and operational experience.

This being said, you should take stock of both your strengths and your shortcomings as a future small business owner. You should seek a partner whose experience, skills, and general demeanor complements the first and bolsters the second. You might even write out a "business partner job description" to help you vet candidates as you continue through the process.

3. Update your online presence.

Now that you have a better sense of your business idea and what you're looking for in your business partner, you'll want to make sure that any potential business partner candidates have the opportunity to learn more about you.

And what’s the first thing you do when someone sends you a friend request on Facebook, connects with you on LinkedIn, or follows you on Twitter? You probably Google them. You can expect that any prospective partner candidates you reach out to online will do the same to you.

For that reason, you want to make sure that you’re discoverable by search and that the results are work-appropriate and up to date. As a test, you can try searching your name in private browsing (incognito) mode.

If you’re difficult to find via search, you might consider creating a personal website—it’s a great way to put yourself out there and post content under your name. And even if your social media profiles are personal, they might be the highest-ranking results for you, so you'll want to consider linking to your business or website while you’re searching for a business partner.

All of this being said, it's important to remember that you don’t need to use every networking or social media platform available. But you should have a page on the professional platforms, like LinkedIn or AngelList, so people can message you directly (and verify your identity).

4. Leverage your existing online network.

After you've updated your website and social media profiles, you might start your actual search for a business partner by leveraging your existing online network.

Ask fellow entrepreneurs in your LinkedIn, Facebook, or email network about how they found their business partners— that might give you some ideas about reaching out to people you already know or utilizing the resources you have access to. As an example, college or university alumni networks often include professional outlets, events, and even mentoring programs—and in many cases, these include Facebook groups, LinkedIn pages, and job listings on college or university websites.

Similarly, you might find that simply reaching out to entrepreneurs that you already know by email to let them know that you're looking for a business partner can result in a variety of referrals. You'll never know who you can reach or find by simple "word of mouth"—even if it's through the power of email.

5. Search online startup, co-founder, and business communities.

In addition to utilizing your existing network, there are a variety of online communities designed specifically for entrepreneurs looking to find a business partner online.

Although this would normally seem like a strange comparison, in this case, just like online dating, there are different types of sites depending on how you'd prefer to find and meet your business partner.

For example, there are network matchmaking-style websites, like CoFoundersLab, that allow you to create a free or premium account—and based on your profile, use AI algorithms to suggest the best matches for co-founders, partners, and team members.

Then, there are much more informal websites that can be used to find a business partner such as the active /r/cofounder subreddit, where entrepreneurs who are looking for co-founders or business partners post about their business, who they're looking for, and where interested candidates can contact them for more information.

Of course, if you’re initially hesitant to have extended discussions online with potential business partners, you can start by using virtual forums that connect you to in-person meetings. Meetup.com, for example, has an entire category devoted to "career and business" and can direct you to online or in-person gatherings of like-minded professionals in your area.

To this point, when you're learning how to find a business partner online, one important thing to keep in mind is how distance could potentially impact the logistics of your business partnership.

For instance, Richard Shaw started LogbookLoan with a business partner he met through the /r/entrepreneur subreddit, and although the relationship was positive, there were some drawbacks of working with a remote co-founder. He said: It was more the distance that meant the partnership didn't work; my morning was my partner’s evening, and it was hard to schedule Skype calls or get answers to emails the same day. This caused the business to slow down. We both realized it wasn't working and parted ways amicably.

6. Vet potential candidates.

The next step in learning how to find a business partner online? Vetting your potential candidates.

Once you've identified one or a few individuals that you think might make a good fit for your business partner, you'll want to find out as much as you can about them—just as you would with an employee before hiring them. This helps ensure that, first of all, the person is in fact who they say they are—and, second, provides some background information about their career and experience.

So, to vet potential candidates, you'll want to:

Ask to see their resume.

Search for them online—including a basic Google search, as well as on social media and networking platforms. If you're having trouble finding them online, you'll likely want to find some other way to verify their identity. There are a variety of reliable HR background check websites that might be worth considering.

Review their previous work—either from their LinkedIn, personal or business website, or portfolio. You might also ask for a reference from a previous client or business partner that you can speak to.

To this last point, Cristian Rennella, CEO and founder of elMejorTrato, told us that the most important thing to know about a partner is the quality of their work. Having started companies with both old friends and new partners he met online, he said if someone has the right track record—and can prove their work—it really doesn't matter how you initially came into contact.

7. Set up interviews.

After you've verified the identity of your candidates and found one or a few that you feel comfortable moving forward with, you'll want to move to the "interview" stage.

Contact the individual and set up a time for a conversation. Before you pitch someone on the business you want to start, however, you should look beyond their resume and try to figure out what excites them professionally.

Remember, as much as you are interviewing a candidate, you’re also trying to recruit them. In your first meeting, whether it’s in person or over the phone, don’t forget to market yourself as a great business partner, too.

And of course, when you're having this conversation, don’t underestimate the importance of aligning on more than objective business goals. You'll want to keep in mind your core personal and business values as well—if you and your business partner don’t value the same things, it's much more likely you'll face conflicts down the line.

8. Conduct a trial period.

Once you’ve found a prospective co-founder you’re excited about, verified their identity, shared your business plan, and ideally met in person or over a video call, you might be tempted to launch full-force into your partnership.

Unfortunately, when you're learning how to find a business partner online, or in-person for that matter, you won't want to rush into things. Instead, you'll want to start by conducting a trial period—a trial period can be informative for both you and your potential partner and help you both determine if the partnership is a good fit before taking on the risks of starting a business together.

As an example, Dave Hermansen, a veteran ecommerce entrepreneur, recommends starting incrementally with a potential business partner by hiring them for a project at an existing business:

"Practically all of my solid partnerships have started with getting to know the other person by hiring them first to do different things for our already existing companies. Later, after I can see how well we really mesh, I have been able to offer partnerships in either existing or new business ventures with the person."

9. Draft a partnership agreement.

After the trial period, you'll hopefully decide that you've found the right business partner. In this case, you'll want to take the proper steps to make the partnership official—provided your new co-founder is willing to accept the position.

You should draft a partnership or founders agreement that outlines the structure of your business, as well as the arrangement between the two of you as partners. This agreement should address issues such as:

Business idea and goals

Salary and compensation

Roles and responsibilities

Equity breakdown

Intellectual property

How disputes are settled

Exit strategies

To ensure that the document covers all of your basis and is legally binding, consider working with a business attorney to help you through the process.

Best websites for finding a business partner online

Now that you have a better sense of exactly how to find a business partner online, let's review a few more of the websites you can use during the search process:

CoFoundersLab: Mentioned above, this matchmaking-style website allows you to create a profile and find a business partner, co-founder, or team member based on their AI algorithm.

Founder2be: With Founder2be, you can create a profile and browse their network of other entrepreneurs looking for co-founders, designers, marketers, developers, and more.

Cofoundme: Using Cofoundme , you can register your profile and get matched with potential partners. You also can publish business ideas, browse startups, and create job postings.

FoundersNation: Set up like a classic dating site, FoundersNation allows you to create a free profile and browse co-founders in your area with specific skills to find the right partner for your business.

StartHawk: StartHawk is a platform specifically created to matching entrepreneurs looking for their business partners. With StartHawk, you can use a variety of filters to narrow your co-founder search and use their internal messaging system to communicate with potential candidates.

IdeasVoice: IdeasVoice is a global collaboration site that allows aspiring entrepreneurs to share and workshop business ideas, discuss projects, and even find business partners. You can sign up for a free account, or opt for IdeaVoice premium services for advanced search, profile promotion, among other benefits.

AngelList: Although you may be familiar with AngelList as a job search site, many entrepreneurs also use this platform to post positions for co-founders and business partners—especially in the tech industry.

Reddit: As we mentioned above, many small business owners have actually found success using subreddits dedicated to finding business partners or co-founders, such as the /r/entrepreneur subreddit or the /r/cofounder subreddit.

LinkedIn: As you might expect, LinkedIn is designed for business networking—and although it might take some more time and effort—it is definitely a worthwhile resource to use when searching for a business partner online.

Meetup: Even though Meetup.com may be a less direct way of finding a business partner online, it can certainly be helpful when you're just starting your search. Plus, they have groups and topics specifically devoted to business partnerships and networking.

Start Your Dream Business

The bottom line

It's important to remember that you'll want to take the necessary precautions when looking for a business partner online—do the proper research, verify candidates' identities, and follow general internet best practices.

Overall, like most aspects of starting a business, finding your co-founder might involve some trial and error. In this case, you can try to embrace that opportunity, keep an open mind, and talk to multiple candidates before making a decision. After all, the top priority in finding the right person is your compatibility as business partners.

This article originally appeared on JustBusiness, a subsidiary of NerdWallet.

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Novak Djokovic hints at unique business plan with tennis rival Jannik Sinner

• Kevin Palmer
• April 9, 2024

Novak Djokovic took a trip down memory lane at a Head tennis event in Monaco, as he opened the door to a unique opportunity to go into business with his latest tennis rival Jannik Sinner.

The world No 1 gave up plenty of time on the day before his first match at the Monte-Carlo Masters to fulfil a commitment to his racket manufacturer that has been a crucial part of his success throughout his career.

In a presentation broadcast live on Instagram, Djokovic went on a lengthy journey looking back over all the rackets that have brought him the most success, with Roger Federer’s former coach Ivan Ljubicic hosting the event in front of an invited audience.

Djokovic spoke at length about his journey with Head and understanding racket technology, with the changes that have helped to maintain his success explained as he spoke with Ljubicic.

He also spoke about the prospect of what he could do when his tennis story is finished and that is when he came up with the novel idea of going into business with Sinner.

Head are as famous for making ski equipment as they are producing tennis rackets and when Djokovic looked forward to what might come next in his partnership with the sports good giant, he offered up this suggestion.

“In the years to come, I’m really looking forward to getting on the ski slopes,” said Djokovic, who spent some time skiing with his family following his defeat against Sinner in the Australian Open in January.

“Head is also huge in the winter sports and I’m a big fan of skiing. Jannik Sinner is also big (into skiing) so maybe we could do something together one day with Head, who knows. I’m always open to some crazy things.

“It is those types of activities when I step out of my comfort zone that bring excitement and joy, but also bring in new fans.”

Sinner is a big skiing fan and needed to make a decision on whether he would commit his sporting future to tennis or the slopes when he was a young man, with his recent success on court suggesting he made the right choice.

View this post on Instagram   A post shared by HEAD Tennis (@head_tennis)

Sinner is also enjoying his success using a Head racket, with the Italian likely to become their leading male tennis player when Djokovic hangs up his racket for the final time.

If he enjoys as much success with Head rackets as Djokovic, it will be a very successful partnership and it is clear that the current world No 1 and 24-time Grand Slam winner is grateful to the company that gave him the rackets to become a legend.

READ MORE:   The 9 oldest No 1s in men’s tennis: Novak Djokovic breaks Roger Federer’s record

“Since 2009 until today, this has been an incredibly successful journey,” stated Djokovic, looking back on his relationship with Head.

“It’s very challenging for a tennis player to find a racket that he feels comfortable with that serves the purpose and once you find it, you don’t want to get rid of it.

“The Head team innovate and every two years there have to be some changes and improvements.”

He ended the event with a hint that he wants to play for a little longer than some observers have been expecting as he said of his new Head Speed Legend racket: “Hopefully I have two more years to use it!”

The event was attended by Djokovic’s wife Jelena and their two children, with some eyebrows likely to be raised by the decision to stage the event the day before Djokovic plays his first match at the Monte-Carlo Masters.

Spending this much time at an event with a sponsor was an unusual pre-tournament plan, but Djokovic did something similar shortly before Wimbledon at an ASICS event attended by Tennis365 last summer.

What is increasingly evident is Djokovic is determined to have his wife and two children with him as often as possible in this final phase of his career and their presence in Monte-Carlo could inpsire him to play at his best as he chases his first title at the tournament since 2015.

Novak Djokovic made a lengthy appearance with his sponsors Head and hinted at a new venture with Jannik Sinner.

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Two plead guilty to insider trading related to Trump Media merger

Two men pleaded guilty on Wednesday to insider trading in securities in the company that ultimately took former U.S. President  Donald Trump’s  media business public.

Michael Shvartsman, 53, head of Miami-based venture capital firm Rocket One Capital, and his brother Gerald Shvartsman, 46, each pleaded guilty to one count of securities fraud before U.S. District Judge Lewis Liman in Manhattan.

Rocket One’s chief investment officer, Bruce Garelick, is scheduled to face trial on related charges on April 29.

Prosecutors charged the trio  last year with illegally trading on inside information about Trump Media & Technology Group’s plan to go public through a merger with a blank-check company. TMTG operates Truth Social, Trump’s main social media platform.

Prosecutors said the trio signed confidentiality agreements in June 2021 when they were approached to become early investors in Digital World Acquisition, the blank-check company. The agreements required them to keep information they learned confidential and not trade the company’s securities in the open market, prosecutors said.

After hearing the company was in merger talks with TMTG, prosecutors said the trio tipped others and bought Digital World securities, selling them after the deal was announced on Oct. 20, 2021, to make a total of $22 million in illegal profit.

Michael and Gerald Shvartsman said in court that they knew what they were doing was wrong when they traded on nonpublic information.

“I’ve made a terrible mistake,” Gerald Shvartsman said at the hearing.

“Insider trading is cheating, plain and simple,” U.S. Attorney Damian Williams said in a statement after the pleas.

The Shvartsmans are scheduled to be sentenced on July 17. Securities fraud carries a maximum sentence of 20 years in prison, but any sentence would be imposed by the judge based on a range of factors. The average prison sentence in federal fraud cases in the U.S. last year was around two years.

TMTG was publicly listed in late March, and its shares have been on a  wild ride fueled by speculators  betting on enthusiasm for Trump, the Republican presidential candidate in  November’s election .

The stock shed early gains this week as Truth Social’s parent company disclosed it had lost more than $58 million in 2023.

TMTG shares were trading at around $51.60 on Wednesday morning, making Trump’s stake worth about $4 billion, though he is not allowed to sell or borrow against it for six months.

Trump Media is also embroiled in legal battles in Delaware and Florida with co-founders Wesley Moss and Andrew Litinsky, who have accused the company of trying to improperly dilute their stake. Trump Media has argued they failed to earn their shares and seeks to strip them of their ownership.

You can now get Ozempic at Costco — but don't expect big savings

• Costco is now selling the weight loss drug Ozempic through a partnership with health startup Sesame.
• Members can pay $179 for a prescription and appointment as part of a three-month package.
• Still, that doesn't cover the cost of the GLP-1 drug, which has gained popularity but can be costly.

Silver bullion and sushi aren't the only new additions to Costco's product selection this year. Now, you can get a prescription for the weight loss drug Ozempic through the retailer, too.

Costco has started offering the prescriptions through a partnership with healthcare startup Sesame, CNN reported on Tuesday. For $179, members can get a prescription for the GLP-1 weight loss drug plus a meeting with a doctor or specialist. Members who get the drug are also able to message a doctor with questions or issues as they continue to use Ozempic.

One thing the program — which lasts three months and is renewable — does not include is the actual cost of Ozempic, which can run up to $1,600 a month without insurance, CNN reported. Getting insurance to cover the drugs is still tough for non-diabetic users, and some employers are worried that the costs could strain their finances.

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Costco did not immediately respond to requests for comment from Business Insider. Sesame Chief Marketing Officer Michael DiLorenzo told BI that the company has seen the number of participants in the startup's weight loss service increase by 50 times since it unveiled the option with Costco on Tuesday.

DiLorenzo said that Sesame is "focused on making sure that the products we have in-market now with Costco — weight loss, primary care, and mental health — are delivering the exceptional experience and results that Costco Members expect of everything they get from Costco."

Ozempic, Wegovy, and other GLP-1 drugs have gained popularity among people trying to lose weight over the last few years. First intended as a treatment for type 2 diabetes, the drug uses semaglutide, an ingredient that can moderate blood sugar. It can also reduce appetite, which is why it has gained traction for non-diabetic patients trying to shed pounds.

Sales of the drugs have been so great that they likely helped Denmark avoid a recession since the country is home to Ozempic- and Wegovy-maker Novo Nordisk.

Costco started working with Sesame last fall to offer basic health services, such as virtual check-ups. GLP-1 drugs weren't initially part of the partnership, according to Sesame cofounder and president Michael Botta.

But approximately one in five requests that Sesame got through the Costco program was about weight loss, so Sesame developed the offering to cater to those customers.

"We realized pretty quickly, just by looking at what people were curious about, that there was a clear unmet need here," he told CNN.

Watch: Ozempic explained: how a miracle diabetes drug became the center of a weight loss craze

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