4 Things To Consider When Starting A Business Partnership
Starting a business is always an exciting time, creating a successful business is a dream for many people.
Unfortunately for many this dream does not become a reality. Partnerships often fail resulting in a major strain put onto the business and the relationship with your business partner.
Considerations before starting a business partnership
While it may seem fine to rush into starting a business straight away, there are a few things you need to consider when it comes to business partnerships. They include:
1. Your Exit Strategy
When starting any sort of business, it’s important to devise a proper exit strategy. Nobody goes into business to fail, however, it’s also smart business to know that some relationships may turn toxic and when this happens you will need to protect yourself and everything you’ve worked for.
Taking the time to sit down plan a proper strategy will help make the separation process much easier if it ever comes to that. Think of it as a pre-nup, but for you and your business partner.
2. A Partnership Agreement
Similar to an exit strategy a legal written and signed partnership agreement is a must when entering into a business partnership. Every detail and obligation of each partner must be written out in full and signed by all parties. Make sure your contract is legally bound by a lawyer who has been mutually agreed upon by both parties. The lawyer will be able to oversee all aspects of the contract. You may thank your lucky stars that you have taken the time to devise an agreement if your partnership goes south.
3. Your Relationship May Not Last
Going into business with a close friend or family member can be tough, especially if there happens to be a disagreement down the track. It is important to realise and accept that some relationships may not be able to survive through a business meltdown.
It is crucial that you consider social impacts if anything were to happen to your business partnership. Business comes first and relationships second, if you want your relationship to last consider a different business partner or work on your own.
4. You Use Your Own Assets
Sharing your personal assets with your business partner may seem like a good way to get your business up and running. This can come to bite you as not all business partners are upstanding business partners that won’t treat your assets like a gift and use them however he or she sees fit. Using business expenses for the business will ensure your personal assets are kept for yourself.
Whenever you start a new business it pays to dot the i’s and cross the t’s when it comes to working with a business partner. Not all relationships remain civil so taking the time to ensure all of your affairs are in order will make for a smoother transition if anything does go wrong. LHD Lawyers are extremely experienced in business practises and will be able to help you will any concerns you may have.