Are you about to negotiate an agreement with your prospective partner? Residents of Texas may want to learn more about what to include in a written partnership agreement when starting a business. Done correctly, a business partnership can be a successful and lucrative way to start up your enterprise.
Most experienced entrepreneurs and knowledgeable sources agree that a written agreement should be in place. At the very beginning, you must decide on the structure and approach that will mutually benefit your interests, those of your partner and those of the business itself. You should consider the following points.
Talk about projected business growth
What are the goals? Include the use of capital and debt. Are you willing to branch out into other areas?
What will be the process for distribution of the profits? Will each partner have an equal share? You might also consider employment practices. Will you hire friends and family members? This is a common practice in the beginning of many small businesses. Discussing how to resolve the problem of an employee who is simply a poor fit is also something you might want to do now.
Protect your own interests
Will there be new partners? You need to plan for long-term issues. What will happen when one partner wants to leave the business or buy out the other? Putting the process into the written agreement ahead of time is a smart move.
Have clarity about conflicts as well as goals
In an ideal world, your goals and those of your partner would align, but the world is not ideal, and conflicts may arise. Identifying points of conflict early helps promote compromise and resolution in the best interests of the business. A written partnership agreement can save partners from resorting to other aspects of business law.
As the business grows, there will be areas of disagreement. You should include terms in the business partnership agreement that clearly state how the business will handle conflict in the future. Those formalities can help you take the personal emotion out of the business issue.
Set yourself up for success. Consider the issues in your partnership agreement before launching the business.