Perhaps you have gone alone so far in your business and sudden expansion requires you to bring on more bodies to help out? Maybe you’ve always dreamed of going into business with a former co-worker? In either case, you might be thinking about a business partnership.
Successful legal relationships are usually backed up by sound contracts. In the case of business partnerships, such documents are usually referred to as partnership agreements.
What can a partnership agreement do for you and how should it be formulated?
Who gets what?
While you may be very close with your business partner, it is unlikely that they are helping you solely for the good of their heart. A key motivation for both of you will be profit. They will want to see a return on their investment. What profit share can they expect to obtain? Will you have an equal split or staggered payment structure? Your partnership agreement should clearly outline how your partner will be paid so that disputes are kept to a minimum.
Defining your roles
You’ve neutered a partnership to help one another, not step on each other’s toes. It is important that partners play to their strengths and weaknesses, defining their individual roles around these. If you are a number cruncher, then you may want to take a back seat when it comes to motivating staff. If your partner is more sociable, they may want to take on a more front-facing role with your employees. In any case, you will want your partnership agreement to contain instructions over your individual roles so that confusion is avoided.
Your company can grow from strength to strength with the right business partners. If you find yourself in the middle of a business dispute, be sure to check out your legal options.