Having a partner when you start a business can be the most crucial form of support. The two of you can trade off on the most stressful job responsibilities. You can fill in the gaps in one another’s experience and knowledge. You can also minimize the financial strain that each party experiences during the startup phase for your company.
If you have found a potential business partner and want to establish a formal partnership, you will need to draft a partnership agreement. Considering the three factors below carefully can help you create the most effective partnership agreement possible.
What will you contribute to the partnership?
Establishing what each of you has to give in a partnership is very important. You don’t know what kind of unspoken expectations your partner may have, and you certainly don’t want to disappoint them.
When the two of you are honest with each other about what you can give and intend to commit to the company, it will be easier for you to maintain a positive dynamic.
What are your goals for the company?
Do you hope to develop a small local firm that thrives because of happy clients? Do you want to start with one restaurant and then branch out, possibly exploring franchise opportunities if your concept proves successful?
The two of you need to have similar goals for the long-term development of the company if you are to have much success in your cooperation with one another. Discussing those goals early in the partnership will help align your perspectives.
What will happen at the end of the partnership?
Like any relationship, a business partnership will inevitably end when one of you retires or chooses to move on to another company. There’s also the possibility of a partner dying or the company failing.
You need to discuss how you will dissolve the company, buy your partner out or make an offer to leave. It can also be a smart decision to add plans for communication issues and disputes. Requiring that you attend mediation together before going to court could help preserve your relationship when you fail to see eye to eye on some unexpected issue.
Carefully thinking about the business you want to create can help you establish a business partnership that can help you accomplish those goals.