PARTNERSHIP

TUTORIAL: STARTING A SMALL BUSINESS
Table of Contents

1. Permits and Licenses
2. Forms of business: Sole Proprietorship
3. Forms of business: Partnership
4. Forms of business: C-Corporation
5. Forms of business: S-Corporation
6. Business Insurance
7. About business logos

Forms of Business: Partnership

The potential for problems in a partnership is enough to cure most from even considering it, but let's look at it objectively...

The advantages of a partnership

- Two (or more) heads are better than one. When you have a team of dedicated entrepreneurs building and believing in the same business, you have a massive head start. Diversity in training, skills, experience, personalities and talents is a massive plus when it is managed in such a way that people compliment each other.

- More capital.

The disadvantages of a partnership

- That same diversity can cause conflict and destroy friendships and the business.

- Partners often spend too much time trying to make their relationship work - not enough time building a business. If it doesn't run smoothly from the start, it will be a frustrating experience, because the resulting inefficiency usually converts to poor profits.

- What happens when a partner quits, dies, steals or just doesn't deliver?

The partnership agreement

Have a partnership agreement drawn up by a lawyer.

The partnership agreement should state exactly what each partner's responsibilities are, how the responsibilities are reassigned if a partner should quit etc.

Discuss the draft with your partner and show it around. Get as much input as you can from people who have been or are in partnerships. Cover every imaginable problem or change of circumstances. Talk to your lawyer. In most cases there are standard agreements that you can look at to make sure you didn't miss anything.

Even with such an agreement in place, things often don't run smoothly. I don't really believe that partnerships can't work. There are great success stories that prove just how effective they can be.

If you really know your partner and you cover your bases, yours might be the next success story.

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