What’s the end goal of your business partnership?
The goal of a business partnership agreement is to make it mutually beneficial for both partners, which requires fairness and excellent negotiation skills. Before consulting an attorney, business partners should clarify common goals and visions. Bringing in an attorney covers the legal aspect of a business partnership agreement, also known as an Operating Agreement.
Here are a few things you and your partner should talk about: What’s the end goal of the business partnership? How will revenue be split up? If the partnership fails, how will each party be compensated? What happens if one partner decides to leave?
It’s important to be specific in any negotiation. Avoid saying “between” and don’t offer a range of options because it will be tempting for the other party to choose the option that is most beneficial to them. Also, create an atmosphere of urgency in order to drive the negotiation. If you are short on time, don’t allow yourself to settle for less only because you want the deal to be closed. Another strategy is to be the first person throwing out a number. Research has shown that the result of the negotiation is often closer to what the first person offered.
Ready to negotiate? Here are more tips for successful negotiation.
Operating Agreements are by far the most important document for business partners to develop. Learn more about our unique 4-step process for creating Operating Agreements.