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Things to consider before forming a partnership

On Behalf of | Sep 3, 2021 | Business Law |

If you want to start a company, or even if you are already a business owner, you may be wondering if taking on a partner is a good business move. Having a partner can be beneficial in numerous ways, especially if there are areas in which you are not knowledgeable.

However, having a partner is not for everyone. If you decide you want to partner up, there are certain things you should do to make the partnership successful.

Considerations before forming a partnership

According to the U.S. Chamber of Commerce, with a partner, you can share the financial responsibilities, limit your personal liability and run the business more effectively because you are both contributing specialized skills.

When considering a partner, you should be able to communicate and share short-term and long-term goals and values. One important discussion you should have right away is a financial one. Discuss the amount or percentage of start-up money each of you will contribute, how you will divide expenses and profit and how you will manage finances on a daily basis.

How to have a successful partnership

If you decide to form a partnership, the two of you need to decide on what type of partnership you want to have. According to Inc., one of the first steps to take for a successful union is to set clear expectations right away. This includes who will be in charge of what, who will manage staff, how to manage finances, how to deal with conflicts and what happens if one partner decides to leave the company. Creating a partnership agreement is a good idea to put everything in writing.

You need to treat each other as true partners to avoid competition and conflicts. Other important aspects of a successful partnership include honesty, communication, transparency and flexibility.