Partnering is a great strategy for small and solo operators

For small and one-person businesses, a great way to pursue bigger projects and expand your business is to partner with another business, often another solo operator but sometimes a larger firm. Say, a graphic designer could partner with a web developer on a project to produce a local directory funded by advertising dollars. Or, an insurance consultant could partner with an accountant to put on an special event on health insurance options for small businesses.

The possibilities are endless — and so is the potential for the relationship to go awry.

Here’s a quick rundown of some of the more important legal and practical realities to consider.

Who should consider partnering? I’m putting this first because I meet a lot of fresh entrepreneurs who find it intimidating to partner up with anyone. So, first off, let me say you should not be intimidated to consider arrangements like these, even if you’re a solo operator allergic to contracts. Yes, you do need to execute a contract with your partner(s) in order to do it properly, but it’s not that hard to do. Anyone in business for themselves needs to be comfortable with contracts and agreements anyway. Look for quality templates (Nolo has tons) and use them, customizing them for your specific situation. Ideally, you’ll also have an ongoing relationship with a lawyer who can review work you’ve done and answer the more detailed questions you’ll sometimes run across.

Bottom line: Don’t let your aversion to anything “legal” put you off of partnering.

What is partnering? By “partnering” I mean your business (yes, solo operators and freelancers included) joins forces with another business for a short- or long-term project, where you both “own” and are invested in the project in certain essential ways, in particular:

  • splitting profits (with whatever distributions you decide)
  • splitting costs (again, how you divvy those up is up to you), and
  • sharing control.

Legally speaking, the typical way this is done is for the two companies to execute a joint venture agreement that covers all the necessary details. Basically this is just a specific type of contract that outlines the important terms of the agreement between the partners (again, the most important of these have to do with profits, costs and control, but other critical issues include termination provisions, intellectual property, etc.).

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As promised, the downloads: Two free contract samples

Sample independent contractor agreement

Scroll to the bottom of the post for links to download two contract samples.

All week long I’ve gone back and forth about what free download I’d offer as promised this week. Invoice tracking worksheet? Warranty tracking worksheet? Billable rate calculator? After getting a whole bunch of these ready in the last several days, it occurred to me that one of the most stressful things for the newly self-employed is developing a standard contract for their services. Hiring lawyers is expensive, and the many free contracts you can find online tend to be crappy at best.

The best way to go, as I’ve always advised, is the Nolo route — Nolo offers a long list of business books that include contracts and agreements, plus its website has tons of downloadable agreements, most for under 20 bucks. There are more than a dozen downloadable contracts just for independent contractors (ICs) alone, each aimed at a specific type of IC such as accountants/bookkeepers, consultants, and creative professionals. The terms and clauses in Nolo’s agreements are comprehensive and detailed, and the step-by-step instructions are the best out there.

But besides using a solid standard contract template to help you draft your own, sometimes it can be incredibly helpful to see examples of other businesspeople’s contracts — and that’s what I’m offering today. Below, you can download two (yes two!) of my own contracts that I’ve been using (and refining) for years for my editing and consulting services. I’m offering two versions so you can see the difference in how I do a flat-rate contact versus an hourly rate (sometimes called “time and materials”) contract.

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