If you ever participated in a three-legged race, you know how much fun they are. With one leg tied to the leg of a partner, you race for the finish line. When you and your partner are in synch, you move like one, taking long strides and using each other's momentum to carry you forward. But when things go wrong, they go very wrong. An uncooperative or ill-fitting partner can leave you lying in a heap while others pass you by.
The same is true for a business partnership. When you are like-minded and focused on the same priorities, your business may thrive and grow. When methods or philosophies clash, your business may suffer. So how do you reduce the chances of losing in the three-legged race of your life?
A thorough partnership agreement
Before you strapped your leg to your partner's, you may have whispered a quick strategy, deciding which leg to start with and how to maintain your balance. You may have scouted your competition and planned a way to defeat your most worthy opponent. You can use the same strategy for your business partnership. By creating a partnership agreement, you and your partner may be able to mitigate some of the most troublesome issues of sharing a business. For example:
- How much will each partner invest in the company?
- How will you share profits?
- How will you expand or take on future partners?
- What decision-making process will be in place, and how will you manage disagreements?
- What will be your contingency plans if one partner becomes ill, dies, divorces or wants out?
- When and how will you dissolve the partnership?
In addition to these, business advisers strongly recommend including a non-compete clause in your partnership agreement in case one partner decides to leave your company and start a new one, taking along your trade secrets and clients.
Perhaps the first true test of your ability to communicate and cooperate with your partner will be the drafting of your partnership agreement since open and frank communication is often the key to any successful relationship. For assistance in covering the essential factors in a valid and complete partnership agreement, the advice of a Texas business attorney may prove invaluable. A partnership protected by a carefully drafted contract may provide the advantage you need to cross the finish line to a successful business venture.