When starting a business, it is not uncommon to take on a partner. Having one can reduce individual startup costs, minimize liabilities and lessen the workload.
However, the daily operations and the company in general can be greatly affected when disputes arise. Fortunately, there are some strategies to minimize conflicts along the way.
Choose the right business partner
Minimizing conflicts begins early on when choosing a business partner. Architectural Digest discusses what to look for in the right partner. For the most effective partnership, each partner should have different skills and strengths. In choosing a business partner, identify what your strengths and weaknesses are, and look for someone who has the strengths you lack.
It may seem natural to pick someone who is similar to you, but differences are important in business partners. Each of you may have different experiences, which can help improve the business. For example, one of you may be better at being the face of the company, while the other is better at bookkeeping and other behind-the-scenes duties.
What you do want to share with a potential business partner are shared goals, values and vision. You should also be able to trust each other and communicate well.
Create a detailed partnership agreement
A well-written partnership agreement can also prevent many disagreements. The U.S. Chamber of Commerce discusses some of the important aspects to add to the agreement, which include:
- Each partner’s financial contribution and ownership percentage
- Profit and loss division
- Each partner’s duties
- Strategy for partner withdrawal or death
The more detail you include, the more clarity each of you will have regarding the business as a whole and your individual roles. The agreement should also address how you would handle serious disputes, such as whether you agree to arbitration to avoid litigation.