If you’re a small business owner, you’ve most-likely considered entering a partnership at one point or another. From an outsider’s perspective, joining a partnership can seem like a great use of resources, capital, and energy. However, most partnerships don’t pan out the way partners would hope because many business partners enter a partnership for all of the wrong reasons. Some of these reasons include not having enough connections, shortage of financing, lack of skill set, or simply not wanting to operate alone. That being said, there are many variables that may come into play and derail a partnership as the business picks up.
Don’t let this prevent you from entering a partnership. Partnerships don’t succeed for many different reasons but there are significant benefits to a successful partnership. The ones that work can increase efficiency and possibly expand service offerings to customers without incurring more costs for additional staffing. No matter how the business venture plays itself out, you should definitely make sure you and your partner have the proper documentation before you form your business entity.
If you decide that a partnership is the correct route for you and your business, then there are definitely steps to complete in order to increase your chance of forming an effective partnership. Partners should have a clear, strategic plan prior to establishing the business partnership. Identify why this partnership is needed and make sure that it is clear for both parties. Discuss the long-term vison for the business partnership and try to identify any possible roadblocks, including the steps to getting past those issues. Develop an exit strategy and make sure all parties are agreeable to the terms. All of these topics can be addressed in a partnership agreement, operating agreement, or bylaws. These documents basically act as your business prenup. For assistance with drafting these documents, consider seeking counsel from an experienced Nevada contract attorney. Lastly, make sure you do your due diligence by getting to know your potential partner. It is important that you both have a mutual respect and liking for each other as you will undoubtedly be working together many hours a day.