Things to Know when Entering a Partnership and How to Avoid Future Partnership Disputes
All relationships can have problems, and that includes business relationships, as well. The goal of creating a business partnership is to combine resources and maximize strengths in order to grow a successful and profitable business. However, before you enter that partnership, you should examine how to avoid any future partnership disputes before they start.
Discuss the Vision
Strategize the vision for the business down to the smallest detail. Strategic planning for a partnership can include everything such as finances, expenses, costs, branding, online website strategy, and everyone’s specific roles. Make sure to only ever partner with those people whom you have known for a while, like, respect, and trust.
Discuss the Details
Determine your six-month, one-year, three-year, and 10-year plan for growth. Make sure everyone is on the same page for all areas of a business. Determine why you truly want to partner with this specific person, and why it would be profitable and emotionally beneficial for you to do so. Determine the percentage of ownership, and the allocation of any profits or losses. Decide who can make fiduciary decisions or bind the partnership with or without consent from the other partners. Decide which partners will be able to make decisions, and the areas for which each partner will be responsible. Decide what will happen if one partner dies, or if there is a dispute. Decide on a business structure and how the business will operate day-to-day.
Write it All Down
Make sure to memorialize all conversations regarding your business. Oftentimes, people have short memories. After making all of the decisions above, contact an attorney to create the legal documents you need to ensure that your business is established legally and will operate effectively. An experienced business attorney will also be able to help provide additional information and resources you may not have considered.
Have an Exit Strategy
Unfortunately, relationships do not always work out, even with the best of intentions and planning. Business relationships are the same way. Just like having a prenuptial agreement, making sure that your partnership has an established plan for dissolution that is fair to all parties can help avoid any future lawsuits about intellectual property, real property, assets, and debts.
Unfortunately, if business disputes can not be resolved, the partnership will have to terminate. Making this difficult process easier by having an established plan in place will only help all parties involved.
Contact an Experienced Business Attorney
If you are considering establishing a partnership, it is imperative that you visit with an experienced business attorney. Executing legal documents that not only correctly set up your business, but also offer protection against future liabilities, are important to establish for all partners in the new business relationship. Contact the Law Office of Kris Mukherji at (858) 442-5747 to learn how you can create a wonderful partnership from the beginning and attempt to avoid or mitigate any future partnership disputes.