Business partnerships can either make or break a company. Successful business partners complement each other’s skills, have clear roles and responsibilities, prioritize integrity and trust, leave room for growth, and have an Operating Agreement in place that clarifies every detail of the partnership.
There are a few factors that set business partnerships up for failure. When looking for a partner, many entrepreneurs choose someone who can only satisfy short-term needs. Ideally, your business partner should be someone who will be needed in the long-run. Another reason why partnerships fail is resentment towards a partner who only contributes cash. Partners agree on their contributions and how profits will be split up, but later feel like it’s an unfair deal, laying the groundwork for disputes about money and power.
Furthemore, businesses fail because partners don’t know each other well enough. It should be in your best interest and the interest of your company to know your partner inside out. While evaluating possible business partners, be aware that most people won’t change their habits. It will be a waste of time and energy to hope that your partner will change significantly. If your partner is not a good fit from the beginning, chances are low that you can overcome those differences.
You should also be aware of your own personal traits when bringing another person on board. If you like to be in control it is advised to choose a partner who allows you to be in control. After all you should share common goals regarding how profits will be allocated to each partner, not only is successful times, but especially when your business is struggling. Lastly, every business partnership should have a reporting system in place. If there is no reporting, some people are likely to slack off or sweep things under the rug.
Taking care of formalities early in a business partnership saves you from possible legal battles later on. Learn more about our 4-step process of creating Operating Agreements at http://speralaw.com/louisiana-operating-agreement