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Data Swami

Data Swami

Business Member
    • Business Listing
    Jan 9, 2025
    203
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    Burton Upon Trent
    www.pattrndata.io
    What is everyone's thoughts on business partnerships?

    Had an interesting interaction with someone who I had got talking to through being on a business hour radio session with them.

    Long story short we got talking about a potential partnership with a product for LinkedIn to do outreach and they would do the messaging and ideal client profile creation while I would manage the automation around it and further develop the product. And at its heart would be using that product to upsell their services and my ai automation services as its a way to show impact of both.

    My whole feeling was that we should keep IP seperate for each other so they owned their methodology for messaging and I hold all the IP for the product as ive already developed part of it and will continue to do so with my own roadmap.

    As such I wanted to setup a collaboration partnership where we split profits based on a percentage but costs associated to development i would still take on myself the only fees we would take would be the hosting of the product.

    For some reason they weren't comfortable with a partnership like that and wanted to create a new business shared 50/50 where cost of hosting where i could cross charge hosting etc. However that would then tie the dev and product to that new biz which would then mean they had 50% of the product. Only way it could have worked is if i whitelabeled it for that new company. It also tied us both to each other in terms of liability and IP which I defo didnt want either.

    Or is it just them trying to get more than their fair share of the partnership by doing it this way?

    Throughout my business learning ive always seen a great value in partnerships especially with the current trend of partnerships growing across many different industries and quite a demand for services that help identify good partnership prospects.

    Is it just me in my "bubble" of contacts and people around me who are just more open to partnerships and for others its more of a risk for them? If it is a risk thing what sort of risks do you associate with partnerships?
     
    Business partnerships require all the care of employing someone, with considerable added caution.

    First, choosing the right person. Just because they have the extra bit of knowledge or product that you need does not make them a good fit for you. Nor you for them. You need to spend a lot of time exploring how good the fit is. Like choosing a marriage partner. Only you will spend more time with them.

    Secondly, should you proceed, get a proper contract drawn up between you. That might be a partnership agreement, or you might form a Limited company and you will need shareholder agreements and contracts of employment.

    Most important of all is to agree what happens if you fall out, or if one of you is no longer able to continue. It needs to be put in a very well crafted contract, because these things do happen. Also, spell out in that contract exactly what each is putting, and exactly what each will do - a job description, if you like. Agree remuneration, and the mechanism for changing it.
     
    Upvote 1
    The plus side here is that these are exactly the discussions you need to have before you go into a partnership rather than 18 months into it. If you can't agree now, I guarantee you won't later.

    There are many and varied views - some say never go into partnership, others say never go 50/50

    From many years experience, I've witnessed many successful 50/50 partnerships - and several others failing

    What is nearly universally agreed is GET A PROPER PARTNER/SHAREHOLDERS AGREEMENT
     
    Upvote 1
    Paul Norman said:
    Business partnerships require all the care of employing someone, with considerable added caution.

    First, choosing the right person. Just because they have the extra bit of knowledge or product that you need does not make them a good fit for you. Nor you for them. You need to spend a lot of time exploring how good the fit is. Like choosing a marriage partner. Only you will spend more time with them.

    Secondly, should you proceed, get a proper contract drawn up between you. That might be a partnership agreement, or you might form a Limited company and you will need shareholder agreements and contracts of employment.

    Most important of all is to agree what happens if you fall out, or if one of you is no longer able to continue. It needs to be put in a very well crafted contract, because these things do happen. Also, spell out in that contract exactly what each is putting, and exactly what each will do - a job description, if you like. Agree remuneration, and the mechanism for changing it.
    Click to expand...
    Definitely we were at the agreement stage and I provided a Strategic Collaboration Agreement so making it clear not tieing us together like the partnership act but a profit sharing partnership with set roles and responsibilities and keeping IP seperate but then they still wanted a new biz setup which i just outright stated no to as it didnt suit my business model. The agreement also had measures for disagreements and termination of partnership too. Which having it as a new business didnt really have
     
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    Mark T Jones said:
    The plus side here is that these are exactly the discussions you need to have before you go into a partnership rather than 18 months into it. If you can't agree now, I guarantee you won't later.

    There are many and varied views - some say never go into partnership, others say never go 50/50

    From many years experience, I've witnessed many successful 50/50 partnerships - and several others failing

    What is nearly universally agreed is GET A PROPER PARTNER/SHAREHOLDERS AGREEMENT
    Click to expand...
    Oh definitely some of the people in my world are very hot on partnerships so I follow much of their practices and get it all agreed in an agreement. I was just intrigued as to what their resistance was to a partnership and wanting a new business setup instead as to me that added far too many complications for each of our businesses
     
    Upvote 0
    I don't think either approach is inherently wrong. It sounds like you both have different ideas of what a "partnership" should look like.

    If I were in your position, I'd also be reluctant to put an existing product with its own roadmap into a new 50/50 company. Once the IP sits inside that company, it becomes much harder to make independent decisions about development, future licensing, or even an exit. That's a significant commitment, especially when the product already exists.

    On the other hand, I can also understand why the other party wanted a separate company. From their perspective, if they're investing time into sales, messaging, client acquisition, and helping grow the product, they may want ownership rather than relying on a profit-sharing agreement that could be changed or ended.

    A middle ground might be:

    • Keep the software IP with the original owner.
    • Create a commercial partnership or revenue-sharing agreement.
    • Clearly define responsibilities, profit splits, support costs, and what happens if either party wants to leave.
    • If the relationship proves successful over 12–24 months, then consider a joint venture or a separate company with agreed licensing terms.
    Personally, I think it's better to earn trust first and merge ownership later, rather than giving away ownership before you've proven you work well together. Plenty of promising partnerships fail because of differences in expectations, not because the product or service wasn't good.

    The biggest risks I associate with partnerships aren't financial—they're misaligned incentives, unclear decision-making, ownership of IP, and disagreements when one partner contributes more than the other over time. Getting those points agreed in writing at the start saves a lot of headaches later.
     
    Upvote 0
    adriancrawford said:
    I don't think either approach is inherently wrong. It sounds like you both have different ideas of what a "partnership" should look like.

    If I were in your position, I'd also be reluctant to put an existing product with its own roadmap into a new 50/50 company. Once the IP sits inside that company, it becomes much harder to make independent decisions about development, future licensing, or even an exit. That's a significant commitment, especially when the product already exists.

    On the other hand, I can also understand why the other party wanted a separate company. From their perspective, if they're investing time into sales, messaging, client acquisition, and helping grow the product, they may want ownership rather than relying on a profit-sharing agreement that could be changed or ended.

    A middle ground might be:

    • Keep the software IP with the original owner.
    • Create a commercial partnership or revenue-sharing agreement.
    • Clearly define responsibilities, profit splits, support costs, and what happens if either party wants to leave.
    • If the relationship proves successful over 12–24 months, then consider a joint venture or a separate company with agreed licensing terms.
    Personally, I think it's better to earn trust first and merge ownership later, rather than giving away ownership before you've proven you work well together. Plenty of promising partnerships fail because of differences in expectations, not because the product or service wasn't good.

    The biggest risks I associate with partnerships aren't financial—they're misaligned incentives, unclear decision-making, ownership of IP, and disagreements when one partner contributes more than the other over time. Getting those points agreed in writing at the start saves a lot of headaches later.
    Click to expand...
    FYI you are replying to a post from Feb 2025...
     
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