Taking on a business partner means having practical and financial support at every stage of development for your company. It also means you have access to experience or resources that you don’t possess.
A partner can be a major asset, but a partnership can also lead to the destruction of the company if it starts out improperly. Including the right terms in your partnership agreement will reduce the chances of a failed partnership leading to financial setbacks for you or your prospective partner.
What inclusions facilitate a more amicable partnership?
A thorough exploration of responsibilities
Both of you may come to the table with certain expectations for the other. If you fail to meet those unspoken expectations, there could be major conflicts in store for the two of you in the future.
If both of you are very clear about what you expect the other to do and what you intend to provide for the business in your agreement, there will be less confusion and conflict as you both perform your roles at the company.
Plans for the future of the business
Do you intend to grow the company to a certain point and then sell it to a bigger operation or an investor? Is your goal to grow from a partnership to a publicly traded organization that dominates the industry in which it operates?
Discussing your long-term goals for the company in your partnership agreement can help ensure that the two of you share expectations and will prioritize the right kinds of development.
Rules for partnership conflicts
If one of you suddenly decides to take a job with another company or retire early, a buyout or dissolution may need to occur. Rather than waiting for that moment to arise to negotiate what will happen at the end of your partnership, it is usually best to make plans for that transition early in your relationship.
When you include the right terms in your agreement with your partner, you start your relationship off on the right foot. Making careful choices early in the business development process will help those hoping to start a partnership.