Finding someone with whom you want to go into business can be a stroke of good fortune for both of you. You can combine your resources, experience and talent to build something special and hopefully profitable.
Though you may currently see eye-to-eye on most matters, things will shift and change the longer you continue to work together. Creating a business partnership agreement in the early stages of your professional relationship will protect both of you and the business that you build together. You will want to address at least the three following concerns in any partnership agreement.
1. What are your goals for the business?
People start companies for many different reasons and with different goals in mind. Perhaps you hope to create a working company and then sell it to an investor as a turnkey business opportunity. Maybe you want to own it for the rest of your life and then pass on your share of ownership to your children or grandchildren.
You and your future partner should talk about your goals for the company and what you’d like to do with it in the future. Including certain milestones or goals in your partnership agreement could help you make important decisions when you reach a point where your opinions on the company diverge.
2. What will it take for one of you to buy out the other?
If you intend to sell the company outright to someone else or if your partner wants to purchase your share from you later, it’s good to have rules in place about how that process will work. Establishing how to place a value on one person’s share of the company or putting down specific terms that must be met for a sale to take place will help prevent conflict in the future.
3. What role will each of you perform at the company?
Maybe you have already discussed how your individual skills will fit into the daily operations of the company. However, you might still have contradictory or overlapping expectations.
Maybe both of you want to handle the daily workflow or work directly with clients. Perhaps one of you expects to just make some financial contributions and not need to work full-time at the company. You need to establish what your expectations are for yourself and your partner.
When you expect and want the same things, it will be easier for you to navigate unforeseeable changes and keep issues with your partnership from diminishing the success of your company.