Whether you have a $1,000,000 idea or $100,000 to invest in an idea, forming a business partnership with someone who has the same drive or motivation can benefit you both. Someone with financial security can help a person with a great plan move forward, while those with strong business concepts could help someone turn liquid capital into a valuable business venture.
Before you rush into a new business with someone, you want to take a moment to make sure that the formation of your business partnership will adequately protect you if things don’t turn out the way you hope.
Create a thoughtful and thorough business partnership contract
You probably hope that this business will be wildly successful and continue to operate for the foreseeable future, but there is no way to predict exactly what will happen. It’s possible the business could fail despite your best intentions. You could also find yourself disagreeing with your partner about the future even when the business becomes successful.
Your business partnership agreement should thoroughly and specifically outline the responsibilities and contributions of each partner to the business. You should also commit your early plans for the business in writing. Finally, consider what will happen if one of you wants to leave the business in the future or you choose to shut down or sell the company.
Addressing all of these issues as early as possible will ensure that you and your partner see eye-to-eye on the most important issues and that even if problems arise in the future, you have a plan in place to sell your share of the company or buy out your partner.