Are Your Interests Protected in That Business Partnership?
Are you about to enter a business partnership?
Or are you already in a business partnership?
I need you to pay very close attention to the information in this article.
Chances are you haven’t thought of this before, but let me ask, are your interests protected in that partnership?
By that, I mean, are you protected?
Most times, when two or more people come together under any form of business arrangement, what is usually paramount to them is profit.
They want to change the world with their brilliant business idea.
I can totally relate.
However, there are some little foxes that can destroy the vine and one very prominent one is conflict.
Research shows that about 60% of business ventures collapse because of conflict between the founders or business partners.
How can you avoid being part of this statistic? It is by foreseeing the possible issues that can lead to conflicts, discussing them thoroughly with your business partners or co-founders ahead and agreeing on the necessary terms of being business partners.
What issues should you and your business partner(s) or co-founder(s) agree upon?
There are a lot, but I will touch on three in this article.[Great Read: 10 Solid Ways to Make Your Customers Stick with You]
The End Goal
The first important thing is to agree on the end goal for your business arrangement or company.
This is a very crucial and delicate issue because if you and your business partner(s) don’t agree on this, you might find that you are drawn to opposing sides when it is time to make decisions for your company or business arrangement.
You cannot afford to assume that you are on the same page with your business partner(s) except you ask.
Now don’t just ask, agree on the common goal. This will make it easier to work on the business arrangement together.
Source of Conflict
The second common source of conflict is the lack of clarity about the roles and responsibilities of each business partner.
This seemingly simple issue has led to business conflicts as I have had to resolve disputes between business partners where their roles and responsibilities were not clearly stated, defined and agreed upon.
Overlapping roles can cause friction and the best way to avoid this is by agreeing beforehand on who will be responsible for what.
The third is the exit strategy for the business arrangement.
How will the business partnership be terminated?
What happens if a party wants to walk away?
Do you think it cannot happen (smiles)?[Great Read: 10 Solid Ideas to Bring Out the Best in Your Employees]
Well, in business it is good to be optimistic and at the same time realistic; foresee the worst-case scenario and prepare for it, just in case it happens, you won’t be caught unawares.
These three are just a few out of the numerous important issues I get my clients to discuss and agree upon when entering business partnerships.
Please note that discussing them is not enough. The way to fully protect your interests is by having an agreement documented and signed by all other party (ies) involved.
Once you have a contract that protects you against all foreseeable liabilities, then you and your partners can concentrate on the hectic tasks of running and building your business successfully.
When should the business partners sign an agreement?
Ideally, it should be before or at the onset of the business.
However, it is never late to have a solid agreement in place, even if the business arrangement has commenced.
After all, what is the essence of running a race you are not sure of its destination, so is having a business partnership and not negotiating the salient issues.
What happens when the going gets tough, you can fall back on the agreement for legal protection.
What if there is no agreement? Your guess is as good as mine!
Are you leaving things to chance in that business partnership or will you rather be smart and proactive?
This information in this article is meant for educational purposes.
Nothing in this article constitutes legal advice or creates a lawyer-client relationship.
Please contact your lawyer for legal advice.
Thank you for reading! Please leave a comment and remember to share this post with a friend.
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