How to Properly Set up a Partnership
It takes a lot of courage to start a business, let alone start it with a partner. That is because of the risk that the partnership might not work out, or that the partnership runs into problems that they may not address properly because it is already too late.
However, with proper planning and setting up, you can pull it off successfully with little to no problems at all.
There are two types of business setups that new entrepreneurs mostly cater to: the sole proprietorship and the partnership. In a partnership, the risk is greater although there are two of you that share the responsibility and credit for the running of the company.
Many times a partnership fails not because the people behind it don’t get along well. Most of the times a partnership fails because the partners were not able to straighten things out at the beginning which ultimately caused problems that resulted in the dissolution of the company. However, there’s no need to fear such a situation. As long as you set things right at the beginning, you can avoid a world full of hurt in the long run.
Here are some tips on how you can properly set up a partnership and avoid possible problems:
- Work all details out thoroughly at the start
This is the one thing that new entrepreneurs fail to recognize; it is easier to set up a sole proprietorship because there is no need to delegate responsibilities. However, smoothing all details out is very important in a partnership in order to introduce a sense of organization. Talk it over with your potential partner before you start the steps to incorporating your business. Make sure it is clear who will handle which task in your company, and write it down for reference. - Never rush
A partnership – and all businesses in general – requires monetary investment. Certainly these investments are amounts that are significant and material to your personal lifestyle and responsibility. As such, you should never rush through the process. Make sure you clear all things out before taking the real steps in starting the business. Just keep in mind that you do not have to be pressured by the market share held by your competitors. If you plan it real well, you can come up with a successful marketing strategy that will ultimately take care of that problem. - Get to know your partner
Another reason not to rush is that it gives you time to know your potential partner. Even if you know each other for quite some time, there are some things about his sense of business and ethics that you still do not know yet. One thing you should find out is his sense of responsibility; it might be too late to find out when the business is launched that you have signed on to an irresponsible partner that has only ideas, and no backbone to act on them.
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