Business Challenges and Success
Starting a business is no easy task; you need to secure funding and hire the right experts among other tasks. If the burden seems too heavy, you may consider taking up a partner who can help bear the load; however, keep the factors below in your mind before making a binding decision.
Ownership
When it comes to starting a business as a partnership, one of the main factors to sort out first is the ownership details. All partners usually have to contribute a given amount of money or any other specified resources to be used in determining their share in the business. Note that the ownership details vary from business to business as determined by the value of each partner’s input.
Profit and Loss Sharing
One of the most common reasons for infighting among partners in business together comes in how profits and losses are apportioned. Before you agree to join a new partnership, it is important that you agree on how losses and profits are to be apportioned. In most cases, the ownership shares are used in apportioning profits and losses regardless of each partner’s involvement in the generation of the same.
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Decision Making
Being in a partnership also means that you have to consult each other before making any binding decisions relating to the business. It is however worth noting that any partner can make binding decisions individually as well. To ensure that decisions are made in a timely fashion, while avoiding cases of individual partners getting into binding decisions without consulting others in the business, it is vital that you set a decision making process in the first place.
Dispute Resolution
Since being in a partnership means that you are part of a relationship with one or more people, arguments and disputes are bound to occur at one point or the other. You can plan ahead on how to resolve such disagreements and disputes without the need to go to court, wasting time and money. It is recommended that you include a mediation clause for such cases in the partnership agreement in the first place.
Exit Strategy
Business partnerships always come to an end one way or the other. Whether it is through irreconcilable disagreements, voluntary dissolution or the death of a partner; these businesses always come to an end. It is therefore important that you come up with an exit strategy that caters to each of these situations and leaves all partners satisfied.