Partnerships are always necessary in the business world. Collaboration with the right people can be very beneficial for both sides. However, it has to be set up correctly, with clear goals, obligations, and rights for each member. Also, there has to be a lot of trust between partners, as well as mutual understanding. In this article, we will show you five crucial steps for setting up a partnership business.
Make sure you and partners are on the same page
It is necessary to discuss the roles and responsibilities of each partner before you sign the business agreement. Open talk is vital – tell your partners what they can expect from you and vice versa. Also, all sides must have the same (or similar) reasons to form the partnership. You should agree on the initial business strategy and that is almost impossible without having the same goals. Therefore, discuss your wishes and goals, make sure there is no significant conflict, and make a business plan and strategy. In the end, make sure that such a partnership fits your business niche. Business partnerships are great for service companies,law firms such as Compelling Counsel, private medical practices, etc.
Pick the right business name
The name of your partnership company is one of the most significant aspects of a business. Not only that it should represent both sides, but it is also a starting point for brand development. On top of that, the name of the company will become a trademark of business. So, how to choose the best name? Do your research, find the most exciting name, and make sure you avoided copyright and trademark infringement. Once you all decide on the name, go and register it immediately.
Register your partnership and obtain essential licenses
In most situations, you will have to register the company with your country or state government. However, before that, make sure that agreement contains all necessary details – financial contributions of each partner, profit distribution, managerial roles, etc. Also, you have to explain what will happen to partnership in the future and how members can exit or (re)enter the organization. Details are especially important if you make a partnership with a wife/husband or a close friend. Unfortunately, both marriages and friendships might end, and if that happens, the partnership will also end the same second. Finally, pick all necessary local and state business licenses.
Agree on the structure of your business
Establishing a business structure is vital for partnerships or any other company. In the end, it will determine the amount of paperwork you will have to obtain, as well as licenses, insurances, and permits. However, the most significant reason to structure the partnership business is shared liability between partners. Each partner has to carry a full amount of liability. Also, this step is essential for your partnership agreement, and having a law firm behind your back is crucial. That is the secure way of defining all rights and obligations of each side.
Obtain necessary insurances
Every business has the liability to worry about, regardless of the structure. Therefore, you must consider having the right insurance to protect your business and partners. Any legal claim against your company is a costly and thorough process, and that’s why it is necessary to have proper insurance policy. Another legal aspect you have to take care of, is personal liability. Even if you have general liability insurance, it usually doesn’t cover your claims. Protecting yourself, as well as your partners and business is vital for the future success of your business. Hence, try to obtain all those insurances on time, so you don’t put the whole company in an awkward position.
Setting up a partnership business is a very challenging task which requires many different things to fit together. You need to have the same goals as your partners and the same vision of doing business. However, if that is the case, and each member is on the same side, chances of success will grow rapidly.
