So the idea of going into business with someone – maybe it’s a friend, relative or another company, has caught your attention. Regardless of who the other person is, you need to step carefully, when it comes to partnering up. You’re probably incredibly excited at the prospect of having new concepts brought into your business. As well as extra financial backing. However, a business partnership isn’t something to rush into. You need to take the time to discuss every detail.
To ensure that you and your business are adequately protected, there are a few things that you need to do. You might think that nothing can ever go wrong between you and your business partner, but the truth is, even the best of friends can disagree. So it’s best to cover yourself from the start.
Get a business partnership agreement
The most important thing when it comes to going into partnership with someone else is to put a partnership agreement in place. This is crucial, as, without it, you and your business are unprotected. You need to get the ins and outs of your partnership written down in an agreement, to ensure that both you and your new partner are on the same page.
To ensure that your partnership agreement is fair and legal, it’s best to consult a lawyer. There are plenty of firms out there that offer help with partnership agreements, something that you can find out more info here about. There are lots of areas that you need to discuss before you can draw up a partnership agreement. These include the percentage of ownership, the amount of profits each owner will receive and who will be head decision maker.
How to work out percentage of ownership
Of course, the question is, how do you work out the percentage of ownership? This can be a tricky one as the chances are you’ll both have different opinions on this. Just because one person puts a larger amount of money into the business, the doesn’t mean they own more of it. If one person is just a financial partner, and the other is the one who does the hard work, the profits can be split equally. This tends to differ from company to company, and person to person. This is something that you and your partner need to discuss together. Remember, the percentage of ownership that you each have will affect the amount of profits that you receive.
How do you choose the head decision maker?
As a rule of thumb, the head decision maker tends to be the person with the higher percentage of ownership. However, don’t just presume that this will be the case – discuss it with your partner. If you’re both going to be equal when it comes to decisions, it’s a good idea to put a process in place for making it easier. Talk to other business owners who run their company as part of a partnership and ask them how they make their decisions. Get some ideas, and then sit down together and discuss them. It might take some time, but you’ll find a process that works for you.
Once you’ve dealt with the ins and outs of partnering up, and have got your agreement in place. You can then get to work making your business bigger and better.