If you are one of the many people who have heard the saying, “Two minds are better than one,” there is a reason for that: Many times, it is true. In the world of business, the same can be the case. Often, two or more individuals can bring their skills, talents and passions together to create a truly incredible organization that would never be possible with only one founder.
With that said, creating a successful business partnership is not a walk in the park. For starters, it is much more than a friendship or collaboration; it is also a series of legal decisions. As such, it can be a wise move to seek the guidance of a commercial litigation attorney before moving forward with any kind of agreement with your potential partner(s). Before reaching out to a legal professional, it can be helpful to start researching the process of forming a business relationship. Consider what factors you have questions about. Additionally, what concerns do you have?
1. Check Your Values
Without a doubt, one of the most important aspects of any business relationship is the compatibility of values between partners. This does not mean that you cannot disagree, but rather, that the overarching long-term and short-term goals are the same in intent and purpose. If one partner wants the fastest delivery business because she values convenience most, but the other one wants to offer the best dessert menu because he values fun meals the most, their strategies and methods probably will not align without significant work.
2. Set Expectations
Because of the amount of work that goes into operating your business, outlining roles and responsibilities from the very beginning is critical if you want things to go smoothly. With this in mind, think about how much time each partner has to devote to the work. Think about how you can measure each person’s contributions, and when you do, consider time and money, in addition to responsibility. Each of these factors plays a major role in a company’s ability to function.
3. Determine Financial Management
Although talking about money can be difficult, a business cannot operate without it. As such, you need to talk about it before moving forward any further. One thing to discuss is where the financing for your company will come from. Will one or both/all of you personally contribute from your income? Another important consideration is how you will manage the business finances going forward. Remember, these conversations also need to include topics like taking a salary or reinvesting when it comes to profits.
4. Pick a Legal Structure
Sometimes, business partnerships do not end up well, and individuals find themselves in court because of an unresolved dispute. To avoid this kind of situation that often requires appeal lawyers, it can be a good idea to decide on a legal structure with the help of an attorney when you and your partner(s) first set up your partnership. Typically, there are three choices. You may choose from a general partnership, a limited partnership or a limited liability partnership. The structure that is best for you will depend on your unique situation.
5. Identify Dissolution Approach
Finally, another great reason for working with a commercial litigation lawyer from the start is because you and your potential partner(s) can figure out how you will handle a partnership dissolution in the case that you need to end the partnership. Even if you do not foresee the partnership ending anytime soon, taking time to talk about different scenarios that could happen and how you might handle them can help you prepare for whatever comes down the road. No matter how much you plan, the unexpected can happen to anyone.
Business partnerships can be an excellent opportunity for learning, growing and building something amazing together with someone who shares your values. To be successful, spend time reflecting on these considerations.