When considering whether or not to take on a partner, you generally do so with an eye on future success, on making money and on sustaining a long term business model. And while it may all seem very promising and easy-going—especially during the early honeymoon phase, there can be bumps in the partnership road. So what should you know before venturing into a small business partnership? How can you be better prepared?
In creating your partnership, odds are you both bring unique skills to the table. Where one partner may have a weakness, the other might thus compensate for that weakness and vice versa. In some ways it's not unlike a marriage of sorts—so you do need to focus time and again on ironing out problems before they cause a divorce.
First off, you want to clearly define your roles within the structure of your partnership. From the start, these need to not only be defined but written down, signed off on and thus agreed upon. Specify how you will divide up labor and the various tasks associated with the business. Understand how payments will be doled out. How much a percentage each partner gets of any profits and so forth. The last thing you want is vagueness as far as the roles of each partner go.
Additionally, you must tackle the debts and any liabilities associated with the company. What is each of you willing to risk? As partners, how much debt will you take on? In terms of risk in general, you and your partner should agree as far as what level of risk is comfortable for you to assume.
So should you form a partnership? Is this the right time? There are several benefits to having a business partner, among them: from a tax perspective, there are advantages to a partnership versus a corporation. Also, the prospect of being able to ascend to the status of a partner is very attractive to some, think law firms and accounting firms. Regardless, of if you choose to have a partner, always make sure to look over everything thoroughly and make sure everyone is on the same page.
First Union Lending would love to work with your small business partnership on your next project. With a wide array of business loan products to choose from, we have one to suit your company's needs. Call today!