Business Partnership

Partnerships offer flexibility and freedom for business owners, because they promote shared business tasks and the potential for greater profits. If you are thinking about forming a partnership business, make sure you lay a solid foundation by thinking about the following:

• Make sure that you have the same vision and goal as your partner. This is necessary for a partnership to be successful. If one partner is overly ambitious and wants to open national chains, and the other partner just wants to earn a decent living, the business will probably fail. Set a clear plan for the business that includes the needs of both partners.
• Have a monthly meeting of partners. Make sure the partnership is based on open communication. Meet monthly to review roles and share concerns.
• Capitalize on the strength of each partner. Define your business roles according to this. One partner may be strong in operations and finance, and the other in sales. You cannot go wrong if you highlight strengths.
• Consider an unequal split, like 49 percent to 51 percent. In other words, be fair. An equal 50-50 split might sound fair, but it often is not. It may cause impairment when it comes to decision making.
• Form a partnership agreement. No legal documents are needed to set up a partnership; therefore, you can avoid future issues by drawing up a legal partnership agreement. This agreement should include the type of business, pay of partners, distribution of profits and losses, amount of equity invested by each partner, distribution of assets when the business dissolves, plans for changes, length of partnership, settlement in the case of disputes, death, or incapacitation.