Partners Must be Clear on Where They Draw the Line and be Able to Discuss All Important Issues
Business partnerships are highly complicated relationships. Before signing a partnership agreement, the participating parties should have fearless conversations to be clear on where each partner draws the line about important issues. If they cannot have these types of discussions before signing a partnership agreement, it will be hardly possible that they will be able to engage in these types of conversations after signing. Here are some examples of the type of topics partners should be able to discuss before signing a partnership agreement:
- How will the profits be split among the partners?
- When and how frequently will profits be distributed?
- Which partner will be responsible for which duties and responsibilities, and how will each partner be held accountable if his or her duties are not fulfilled?
- What happens when one or more of the partners want out of the business?
- What if one of the partners refuses to work past 5:00 PM or refuses to work on weekends while the other partners feel that it’s necessary to do so for the business to move forward?
- How will important decisions be made, and what happens in the event of a tie in votes?
- How will hiring decisions be made, and will there be an Anti-Nepotism policy?
- How will growth and planning decisions be made?
- Who will have control over and access to bank accounts and banking information?
- How will disputes be resolved?
A framework for discussing these types of complex issues need to be established up front – before signing a partnership agreement. Whether the partners are capable of having fearless conversations is not something that is best “figured out” after the partnership agreement is signed.
If, for whatever good reasons, you do not think the group you are considering entering into a partnership with is capable of having fierce conversations about the business, maybe a partnership (at least a partnership with this group) is not for you. There are many other approaches to business opportunities.
Please let me know if you would wish to have a discussion about this or any other business related topics. I am passionate about helping small to mid-size businesses and their owners to reach their full potential.
Demetri Chambers
Business Attorney
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