The 45th Annual New Ulm Trade Fair is running this weekend — exactly the kind of setting where partnerships begin. A shared audience, a complementary product line, the right conversation at the right booth. But the deals that last aren't sealed at the expo table. They're built beforehand and formalized afterward, with research, legal structure, and a shared plan.

The case for partnering is strong. Small business collaboration delivers across four capital categories — physical, human, intellectual, and financial — including the ability to compete for contracts that neither business could win alone. And a 2023 peer-reviewed study found that small businesses gain more from partnerships than large firms do. Here's how to structure one that holds.

Do Your Homework Before You Commit

Vetting a potential partner is not the same as liking them. Start with what you can verify: financial health, community reputation, and track record with vendors and previous collaborators. Talk to people who've worked with them — not only the references they suggest.

Cultural fit matters as much as credentials. New Ulm's business community is close-knit, and a misaligned partnership shows up quickly — to your customers and your peers. Ask whether your decision-making styles are compatible, whether you share values around customer service, and whether you could disagree productively and move forward.

A polished partner who approaches problems differently than you do can be harder to work with than a less experienced one who shares your instincts.

The Assumption That Can Wreck a Partnership

If you're partnering with a friend or longtime colleague, it's easy to assume the relationship itself is protection enough. You trust each other — a formal legal agreement might even feel unnecessary, or a little awkward to propose.

That instinct is understandable, but dangerous. SCORE warns that skipping a formal agreement is risky regardless of the relationship — legal documents are required, no matter how well you know your partner. Friendships don't create legal clarity, and ambiguity around money, authority, or profit-sharing will strain even the strongest ones.

Bottom line: Write the agreement before you need it — not after something goes wrong.

Shared Liability Works Both Ways

It's reasonable to assume you're only responsible for what you personally signed. That assumption costs more business owners than you'd expect.

In a general partnership — the default structure when two businesses collaborate without formally choosing an entity type — any partner can bind the business to debt or contracts, even without the other partner's knowledge or consent. This isn't an edge case. It's how general partnerships operate by default under the law.

Know what structure you're forming. If you want to limit this exposure, a limited liability partnership (LLP) or LLC may fit better than a standard general partnership. The entity choice belongs in the agreement — not in a later conversation.

Making Partnership Documents Work for You

Your agreement is the foundation. It should define profit-sharing, decision-making authority, dispute resolution, and what happens when one partner wants out. And don't treat silence as safe: RUPA — the Revised Uniform Partnership Act — fills every gap your agreement leaves, meaning Minnesota law, not your intentions, may govern the outcome in disputed situations.

Before you sign, work through this checklist:

• [ ] Roles and responsibilities defined in writing

• [ ] Profit and loss percentages explicit

• [ ] Decision-making authority clear (who can spend what, sign what)

• [ ] Dispute resolution process specified

• [ ] Exit conditions and buyout terms included

• [ ] Shared assets, IP, and equipment documented

PDFs are the standard format for distributing and archiving these documents — they preserve formatting across devices and operating systems. Adobe Acrobat Online is a browser-based tool that lets you crop PDF pages, adjust margins, and resize documents without downloading software, which is useful when cleaning up forms and signed agreements before filing or sharing with your partner.

In practice: If your agreement doesn't address a scenario, RUPA steps in — and state law, not what you and your partner intended, decides the outcome.

Keeping the Partnership Running

Once you're operational, good partnerships run on communication and measurement. Set a regular cadence — monthly check-ins, quarterly reviews — and hold to it. Many partnerships drift not from conflict, but from silence.

Define what success looks like before you launch. If the goal is cross-promotion at the Brown County Free Fair, agree on specific metrics: new contacts made, revenue attributed, follow-up rate. Vague goals produce vague accountability.

If you share physical resources (equipment, a storefront, inventory), document who owns what and who handles maintenance and insurance. If you share staff or intellectual property, those terms need to be agreed upon before day one — not sorted out later.

Build the Exit Before You Need It

Partnerships end — sometimes by design, sometimes by circumstance. Create a buy-sell agreement early, before anyone exits, because pre-planning — not reaction — is what determines whether a partnership concludes cleanly or expensively.

A buy-sell agreement defines how one partner buys out the other, how the business is valued, and what events trigger the process. Draft it while the partnership is healthy, when both sides can negotiate clearly and without urgency.

Start with the Chamber

New Ulm's business community runs on relationship and mutual support — the same values that make business partnerships work in the first place. Whether your next collaboration starts at the New Ulm Home, Health, & Recreation Show at the end of March or develops over time through chamber events, the New Ulm Chamber & CVB connects local businesses with the peers and resources to help those partnerships last. Reach out to the chamber to explore what's available.

Frequently Asked Questions

Do I need a lawyer to form a business partnership in Minnesota?

You're not legally required to use an attorney, but it's strongly recommended. Minnesota operates under RUPA, which means any gap in a self-drafted agreement may be filled by default state rules you didn't anticipate. A local attorney familiar with Minnesota business law can ensure the agreement reflects your actual intentions rather than statutory defaults. Consulting a lawyer before signing is almost always less expensive than resolving a dispute afterward.

What if our collaboration is short-term — like sharing a booth at the GnomeMade Market?

Short-term collaborations don't always require a full partnership agreement, but you should still document the basics: who pays for what, how shared revenue is divided, and who handles complaints or returns. A simple one-page memo signed by both parties offers far more protection than a handshake. Even temporary partnerships benefit from a written record of the terms.

Can a verbal partnership agreement hold up legally in Minnesota?

Verbal agreements can be legally binding in Minnesota, but they're difficult to enforce when the parties disagree on what was said. Under RUPA, even an informal arrangement can trigger partnership obligations — including shared liability for debt. If you behave like partners, Minnesota law may treat you like partners, regardless of what was formalized in writing.

We want to add a third partner to our existing two-person agreement. Does the original document still apply?