A Tradition of Legal Excellence

3 things to consider before taking on a business partner

Many business owners or entrepreneurs with a business idea look to go into partnership with one or more others. This can work out well, but it can also go badly in some cases.

Before you make this move, consider the following:

1. What do you need from a partner?

People typically take on a business partner to fill a gap. It might be a gap in their finances, a gap in their skillset or contacts or even a gap in the amount of time they have available versus the amount of time the business needs.

Work out what it is you are looking for and see if that person can fill that need. Remember that sometimes you can fill those gaps in other ways – for example by outsourcing your accounting rather than taking a partner on just because they have the accounting skills you lack.

2. Are you willing to accept the tradeoffs?

You won’t get the benefits of a partner without making some sacrifices. Be sure you are happy to have to consult with someone on decisions, split profits and so forth.

3. Are you both clear on the terms of your partnership?

Loose agreements can lead to problems later. Getting legal guidance to create a partnership agreement that covers all situations and that you both understand can increase the chance your joint venture is successful. It can also clarify the steps needed if things don’t work out as hoped, and minimize the damage splitting up could cause.

Archives