Working Out the Myths About Forming a Business Partnership
Business partnerships are a cornerstone of many companies, big and small. You and your partner may be starting from the ground up to bring a vision to life together. You may be considering taking on a business partner after your company is established. Either way, there are some important things that you must keep in mind to make sure your partnership and business are healthy and successful. There are several myths about shortcuts to take when forming business partnerships. We’ll look at three of the biggest ones and explain why they are false.
Myth #1: You Can Get by Without a Written Agreement
Chances are, your potential business partner is someone you’ve known for a long time. They may be a close friend or even a family member. You trust them enough to enter a partnership, so there’s no reason to lay out a formal agreement in writing, right? WRONG! There’s nothing offensive or insulting about insisting on having a formal agreement laid out. Unfortunately, people can change, especially if a business becomes very successful or if it struggles. Even if both parties are very conscientious, there can always be unexpected events, like a death, disabling accident, or illness. A written agreement can clearly spell out what is to be done in these situations.
Myth #2: You Don’t Need Lawyers
Hopefully, you’ve been convinced that you need a written agreement. That’s great, but don’t think you can do it alone. You may be tempted to save time and money by not working with a lawyer. This is always a mistake. Lawyers not only can help you handle paperwork and agreements when the business begins but can be an invaluable resource during the life of your company. You may be in a business that is subject to heavy state or federal regulations, and if you try to “wing it” without legal representation, you may be breaking laws without even knowing it. Choosing dependable legal counsel with your business partner is a critical decision.
Myth #3: All Decisions Must be Made Quickly
Entrepreneurs always strive to be go-getters and move quickly. This is an admirable trait, but there are times when you and your business partner need to slow down and evaluate possible decisions. Anything that affects big picture plans for the company, like moving to another location, expanding staff or services or major marketing decisions deserves consideration. Do not be tempted to trust your gut; consult your business partner, and take the time to evaluate available information and weigh pros and cons.