Going into Business with a Partner

Published: 10th June 2009
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Some of the most successful names in the business world today are partnership ventures. Although most entrepreneurs might not like the idea of sharing control and power within the business, a partnership form of business offers greater freedom and scope for expansion and increased profits. However as with any business setup, even a partnership form of business comes with its own set of advantages and disadvantages.

If you are planning on taking a partner for your business, here is what you should know before hand -

One business, One Vision - Every business is structured around a vision and goals. And if two or more people are going to be at the reins, sharing of that vision and common goals becomes imperative. Otherwise it will be like two drivers, going in different directions, fighting over one steering wheel. So if you want to avoid such a situation, take on a partner(s) who shares the business' common goals and is focused to work within the partnership to achieve them.

Does the business cater to the needs of all partners - In addition to sharing business goals and aspirations, care should be taken to ensure that the needs of all the partners involved are met. Whether it involves the job profile or responsibilities that a partner is going to take on or even monetary rewards, every partner will have certain needs and expectations. And your business partnership will prosper only if those needs are adequately taken care of.

Clearly defined business roles and responsibilities - If you don't want a "too many cooks spoil the broth" syndrome, then it is imperative that there is no confusion or doubt about business roles and responsibilities that each partner is going to take on. This will ensure a smooth functioning of the business in the future.

Determine and utilize qualifications and skills as necessary - Each partner will have his own set of skills and qualifications that makes him perfect to take on certain jobs and responsibilities. If you want the business to benefit then allocate business roles based on your partner's skills and qualifications.

Open communication between all partners - Having an open channel of communication is vital for the survival of a business partnership. Unless each partner is allowed to communicate his ideas and speak his mind a business will suffer. Hold monthly meetings of all partners and give each partner the opportunity to share his experiences, thoughts and ideas. If there is trouble brewing, chances are such meetings will help unearth it.

Legal partnership document - Irrespective of how close you and your business partner maybe, draw up a clear legal document that lists in detail the terms and conditions of the partnership with respect to the following:

· Equity investments made by each partner

· Type of business

· Sharing of profits and losses

· Remuneration, compensation, bonuses for each partner

· Asset distribution in case of dissolution

· Provisions for changing or dissolving the partnership if the need arises

· Clause for settling disputes

· Settlement in case of death or incapacitation

· Restrictions of authority and expenditures

· Duration of partnership

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