Pitfalls abound when entrepreneurs decide to become partners. Know what they are ahead of time so you can set up guidelines that allow people to walk away if things go wrong. (http://www.entrepreneur.com/article/196912)
My article explains 7 things that entrepreneurs should avoid while setting up an agreement. And in the readings that we are assigned for this week is mainly discusses the importance of the partners. GO Company encounters difficulties while they are setting up agreements either with IBM or HP. They chose IBM to work out, but IBM set up couple of difficulties to deport GO Company from the field or use their technology like as their technology.
The author resembles the marriage and the partnership and mentions that half of all marriages don’t survive. Thus entrepreneurs have to be very careful about setting the partnership agreement. The first thing that he highlights is “Sharing capital instead of expenses”. If you share your own capital with your partner, you will automatically give away your enterprise ability he says. What is more, by doing that, it will be hard to break the deal and go away if things go wrong. In GO Company’s case, IBM was to get 50 percent of all revenues that GO Company received from parties other than IBM and licenses to all of the patents and copyrights. IBM’s royalties to GO would be capped, which means that, IBM would have free use of GO products. So IBM was really demanding and instead of helping the GO Company, their main aim is absorb the company and take their business advantage. The second one is “Partnering with someone because you can’t afford to hire”. If an entrepreneur has an idea and someone has the ability to implement that idea, instead of incorporate that person into the partnership with an agreement, just hire him or her or work out an independent contactor agreement. The other important point that we can relate to the GO Company is “Overlooking a limited partnership”. By doing that limited partner will not liable for the actions or obligations of the general partner. The other one is “Lacking an out or an exit strategy”. If GO Company would have set an exit strategy in the agreement, instead of selling the company or accepting the harsh conditions they would terminate the agreement having less damage.
These crucial points are related to the GO Company’s situation and if they would have described their business strategy better for themselves, they would see the future before that happen and sign the agreement with respect to that.