If you’re considering stepping into an entrepreneurial partnership, you must have a professional and legally-binding General Partnership Agreement to cover both parties. There are various benefits to entering a partnership. This could be the very thing you need to launch your startup business into a roaring success.
Statistics reveal that as many as 70% of business partnerships fail. What exactly keeps the other 30% going? There are many tips for prospective business owners to keep in mind. The importance of having a general partnership agreement in place should be one of them.
The Advantages of a General Partnership
Having a business partner can offer many advantages:
- The increased skill set immediately boosts your productivity and business’s possibilities
- Access to more capital
- It distributes duties and roles between both partners
- It provides space to brainstorm, be more creative and share innovation
- It offers the provision of additional support
The Disadvantages of a General Partnership
It’s also essential to consider the disadvantages of a general partnership. Understanding them can help you can plan ahead for the challenges you’ll face:
- Compromising and negotiating between partners can be difficult
- Joint liability means you are responsible for other’s decisions
- You’ll need to split profits
- You no independently control the business
- A possible conflict could arise
What To Remember Before Entering a General Partnership Agreement
The majority of the disadvantages can be easily conquered by picking the right business partner. Being an entrepreneur in a business partnership comes with many rewards.
By focusing on mutual benefit, a successful partnership is completely possible for both parties. Start by drawing up some targets and timelines. Also, study the types of skills & resources that add value to your business venture.
Picking a business partner isn’t easy, but think of it as a way of utilizing each strength and weakness to form a solid team. Before you enter a general partnership agreement, truthfully consider how you would work with someone else.
Studies reveal founders of a previously prosperous business have an extra 30% chance of succeeding in their next venture. You may, therefore, want to pick a partner who’s already succeeded as an entrepreneur.
Above all, know you can communicate well with, depend on, and respect each other, despite any challenges and differences.
Drawing Up a General Partnership Agreement
The general partnership agreement is the legal document detailing (in writing) all the ins and outs of this merging of two business owners. All necessary legal issues, including possible exit clauses, should be incorporated.
Why not draw in experts to help you handle this part of the process. A lawyer of companies such as FormPros can assist in creating legal documents, saving you a lot of effort.
Don’t rush this process; think over the aspects carefully. You both need to be fully aware of the advantages and disadvantages before entering any such agreement. That ensures that you can flow & grow together.
Last Thoughts
You may have years of successful business deals ahead. But make sure you start out right: get the partnership agreement right from the get-go. Your business will only be as good as its foundation. Don’t live with any regrets while chasing your business goals.
