Good documents make great business partnerships! So often new business owners develop a great idea with a business partner and in the excitement of getting the business of the ground, they don't put into place the basic documents needed to govern a successful partnership. Here are three ways to ensure your business partnership is on the right track:
1) You have an honest discussion about expectations. Too often, partnerships fall apart because one partner has vastly different ideas and expectations about how much each partner should be working, when vacations are allowed, what hours each should be working, etc. When one partner views the other as not pulling their weight, resentment builds and the relationship goes downhill.
2) Talk about things no one wants to consider. What if a partner died, became disabled or even got divorced? Those are all difficult topics to talk about, but they have a huge impact on a business partner. You need to have written instructions in place in case any of these things happen, or your business will be left in limbo, potentially fighting it out with your business parter's family.
3) How will you decide how much the business is worth? If anyone wants to leave the business as a point in time, you need to have a formula to calculate what that person will be paid when they leave. This means you need to have a method in place BEFORE there's an issue.
These are a few basic ways to make sure a partnership stays friendly. The best practice is to get a proper Operating Agreement or Shareholder Agreement and a Buy Sell Agreement in place. We'd be happy to help on a flat fee basis, contact our office today.
Sarah E. Holmes is a Philadelphia business attorney and strategist that helps start ups and established businesses looking to expand, protect their assets and increase their profits in an approachable, down-to-earth way. When you're looking for a business lawyer in Philadelphia, the Main Line or New Jersey, we can help.