If you want to start a business, there is a good chance you are thinking about taking on a partner. Having a business partner can help with start-up costs, reduce individual liabilities and divide the work responsibilities.
However, not every partnership is successful, and conflicts can be common. For the most effective partnership, not only do you need to choose the right partner, but there are steps to take to reduce disputes.
Choose the right partner and communicate often
Inc. discusses that one key to a successful partnership is finding someone with different strengths than you, as this helps the business grow quickly. However, that is not the only trait to look for. You should trust the person you are considering as a partner and be able to communicate about big and small things relevant to the business. You both should share the same values, vision and goals for the business. You should also discuss growth opportunities and see if they align.
Communication is imperative for an effective partnership. You need to communicate about the big picture as well as the details, such as how you will divide duties. You should also discuss what will happen if one wants out of the partnership.
Write up a partnership agreement
The U.S. Chamber of Commerce states that everything you discuss should go into a partnership agreement that you both sign. Some things to include are:
- Percentage of ownership and how each partner will contribute to the business
- Division of profits and losses
- Daily operations of the business
- Methods to use to resolve potential disputes
- Valuation process for the business
- Strategy for withdrawal or death of one of the partners
Having a partner can be very advantageous for businesses of all kinds. However, how you approach the partnership can have a significant effect on its success.