Business partnerships are beneficial for everyone involved. The partners can offer each other financial, social and intellectual support when starting or running a business. The company benefits from having multiple people involved in its management and planning. Employees and vendors benefit from having someone else to approach when there is a conflict or an issue on the job.
There is simply more stability in a partnership for the organization itself as compared to a sole proprietorship. When compared with it corporation, a partnership is easier to create and gives the people starting the business more control over what happens with the company.
However, partnerships are only as successful as the relationship that gives birth to them. Including the right terms in your partnership agreement can help set your business and your partnership relationship up for long-term success.
Spell out your expectations and intentions
Do you expect to use your advanced degree and professional experience, or do you intend to make a financial investment in the company? Do you intend to run this company for the rest of your life if it is successful, or do you hope to sell it after 10 years to fund your retirement or your next business venture?
Having an open discussion about your plans for the business and your own future with your prospective partner can help ensure that there are no unspoken expectations or miscommunication that will later damage your ability to work together.
Plan ahead for future conflicts
Even if you are siblings or have been best friends since middle school, running a business together may strain your relationship in ways you cannot predict now. When those issues arise, they can damage your business and your perception of your partner.
Agreeing now about the right ways to handle disputes will make resolving future disagreements a little bit easier. Having arrangements to mediate or to apply specific rules to any decisions made during a dispute between partners can help you avoid relationship-ending conflicts later.
Address what will happen at the end of the partnership
Business partnerships change for countless reasons. Maybe your partner will receive an offer to move into a different industry. Perhaps a medical issue will force you to re-examine your timeline for retirement.
Having concrete rules in place about how you will dissolve the partnership or sell the company when the time comes will limit the conflict that develops at the end of your shared business enterprise.
The right planning as you start a business partnership can help you achieve success or at least preserve a relationship with your partner regardless of what happens with the company.