How Do Partnerships Work With People You Don’t Know

Jun 19, 2017

Running a business is difficult when there are multiple responsibilities and needs to be addressed.

Finding and managing funds for a startup is time-consuming. Once you pile on the need for logistical oversight, employee management, marketing, business strategy, and all the small details, it can be overwhelming.

Many people try to simplify the issues by taking on partners. How do partnerships work? These are people who have some ownership in the business and often contribute to the workload.

This is a great way to divide up the major responsibilities of running the business, but it can also present new challenges. Especially when you don’t know the people you’re working with.

If you have wondered how partnerships work, this article is for you. We are covering all the technical and personal aspects of setting up or running a partnership and how to deal with partners you don’t have experience with.

Why A Partner?

A business partnership is a relationship between individuals and/or commercial entities that run a business. A business can have any number of partners, it simply depends on how many extra hands are needed in the entrepreneurial kitchen.

The reasons for starting a business with partners or taking on additional ones vary depending on the individuals and circumstances.

For example, humans tend to be good at a few things while less skilled in other areas. Business partners bring in different traits, skills, and experiences that may complement the others. Business partners can also bring in additional funding sources and business connections.

How Do Partnerships Work

People asking the question “how do partnerships work” can benefit from a simple understanding of Canadian business structures. There are four basic types of business structures any new business registers under to be an official commercial entity.

Sole Proprietorship

A sole proprietorship basically means that one person owns the entire business. Legally, they are responsible for all the responsibilities and potential consequences of doing business. If something goes wrong, they will have to face the legal or financial consequences.

This is a very common business structure for people doing freelance or self-employment work. It can be simpler to startup and more cost effective. It can also be riskier since there is no separation between business and personal assets.

Partnerships do not exist under this structure.


A partnership is a non-incorporated business registered under two or more individuals. They are similar to sole proprietorships since all legal and financial assets and responsibilities belong to the owners but are split up between all the partners.

A partnership agreement is drawn up ahead of time and signed to specify the details of the arrangement. Professional and personal assets aren’t separated, meaning everyone shares unlimited liability.

Limited liability partnerships can limit the amount of financial responsibility of certain partners. These are typical for professions such as lawyers and accountants.


A corporation is an incorporated business which is a separate legal entity. This means that shareholders are protected if legal issues arise that requires financial compensation. In other words, personal assets, such as homes and bank accounts, will be protected if legal matters come up.

Corporations offer more protection but can be more difficult and expensive to set up. Partners become shareholders and own a certain portion of the company overall.


This is a business owned by an association of members. These are common in non-profit businesses where a board of individuals comes together to make overall decisions for the business. Partners are a part of this association and usually have a say through equal voting powers.

Co-operatives can be either For-Profit or Non-Profit. They offer limited liability, but can take longer to make important decisions since it uses a voting process.

Working With Unknown Partners

So how do partnerships work with people you don’t know? Legally, there is no difference. Canadian law doesn’t care whether you know your partners or not. Practically, however, is a different story.

Working with partners can be a rewarding but challenging process. To do it correctly, you first have to think about why you are working with unknown people in the first place. Usually, a couple of different scenarios come up that can lead to unknown partners.

You’ve Never Met

The first scenario is straightforward and common: you simply have never met the business partner. Sometimes, people enter into business relationships without knowing each other. When this happens, the partners are learning about each other for the first time as they set up the partnership.

Quite often, business partners are introduced to each other by a third party. In the early startup phases of a business, it’s common to search for and find additional partners or investors to create a foundation of support and leadership before things take off. Unless the main founder or existing partners have prior experience, they will have to get to know each other.

Long Distances

Another common scenario involves remote work. The internet has made it possible to start and run businesses across vast distances. People can come together in different provinces and countries without ever meeting each other in real life.

Business partners working remotely may start for the same reasons as people working together in one location. The business may need or benefit from extra partners. In this case, the only difference is the physical distance between the partners.

Long distance can present an additional challenge since it can be difficult for people to get to know each other. Just think about trying to start and maintain a new relationship over the phone and computer. For these partnerships, communication will become an extra challenge.


While there are plenty of difficulties with working with people you don’t know, there are several strategies you can use to overcome the challenges. More importantly, many of these strategies should be used whether you know the potential partner or not.

Set Up Distinct Responsibilities

Partnerships invite multiple people into the common space of running a business together. There is no concrete way this should work or how partners should interact. How do partnerships work in this case? Well, it’s really up to you.

The best approach is to divide up the roles and responsibilities everyone has. Cater to each person’s strengths and experiences. Try not to leave too much overlap.

Routine Communication

One of the most important aspects of any partnership is active communication. When you divide up the main responsibilities, it can be easy to have each partner do their own thing without knowing what the others are doing. In this case, communication keeps everything in sync.

Whether in one location or online, communication between partners needs to be consistent and clear. While meetings can be boring, they allow everyone to update and talk to each other.

Technology also makes it easy to stay in touch. Email and phone bridge the distance between people. The internet can help synchronize individual projects, priorities, and deadlines.

Regardless of the form, partnership communication needs to be a priority. It takes commitment and effort to get it right.

Get To Know Each Other

Even though partners may start off not knowing each other, it won’t stay that way for long.

Still, getting to know another person is a dedicated process. Communication is obviously required, but persistence even more so. It’s impossible to know someone else if you are resistant or aren’t committed to the process.

This is especially true for long-distance relationships. In order to face this challenge, take every opportunity to learn about your partners. This should be a step you start before you even take someone on as a partner to begin with.

The more you know about someone else, the better you will be able to work with them. This will help everyone fit into the overall business better as well.


Taking on business partners is not a light or easy decision to make. If you’ve ever wondered how partnerships work, it’s best to educate yourself first before going through the challenges of partnerships.

A partnership is a great opportunity to create or infuse new experience and energy into a business. It brings together multiple minds, talents, skills, and helps divide up responsibilities.

If managed well, you can make working with partners a success even if you don’t know these partners yet. You should expect complications at first. But with dedication and communication, you can work these issues out.

For more help, check out the rest of our blog. And if you’re ready to start your business, make sure to use our Free NUANS Preliminary Search to research any possible name ideas.



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