Be Careful with Handshake Deals – The Recipe for Business Agreement Success Calls for More Than a Pinch of Trust
August 21, 2006
Cooking up a successful business relationship requires trust between the parties involved, but having an agreement in writing is essential to the mix. A lack of agreement and understanding of common goals can lead to the headache of a broken relationship.
Business relationships are not always built on the right terms. It is just as important for business partners to focus on documenting the terms that can lead to long term gain for each party and long term growth of the business, as concern for how they are going to get along.
Nobody enters a business relationship thinking they are going to break up. However, just like marriage, inevitably, some relationships end; and having put an agreement into place during the “dating” season makes it much easier to resolve business issues later on.
What are the key ingredients in a successful business relationship? Trust is required at the beginning and throughout the duration. Also essential is the ability of the parties to speak openly about their business philosophies and the venture as a whole, i.e. where they see it headed, how they see it getting there and what to do when they arrive at their shared goal.
Various entrepreneurs and venture capitalists approach business or deals from different angles. Maybe you are focused on building the relationship of the parties joining together to start a new business and maybe your partner is focused on the nuts and bolts of the transactions; i.e. where the money is coming from and establishing terms to ensure profitability.
Neither of you is off the mark or wrong in your approach, but the essential differences in your philosophies…
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by: Julie A. Dialessi-Lafley, Esq.
August 7, 2006