Entering into a business agreement with a partner is a big decision. While there are many benefits of doing so, it has the potential to end in disaster if you don’t take the right steps upfront. There are many proactive steps you can take to prevent a partnership disagreement in the future.
- Create a contract: With a contract in place, both individuals are clear as to what is expected of them. Not only does this help outline responsibilities, but it will come in handy in the event of a future level dispute. Also, don’t force your partner to sign a contract. Instead, make them part of the process.
- Conduct a background check: This may sound intrusive, but it’s critical to helping you understand what the person is all about. For example, if you find that they’re tangled up in other business-related lawsuits, it’s probably best to consider another partner.
- Talk about finances: Money has a way of turning an otherwise sound business partnership into a messy situation. Before you do anything, talk about finances and work this into your contract. Are the both of you putting up the same amount of money? Do you have the same amount of equity in the business? Answering these questions upfront will put your mind at ease.
By taking these proactive steps, you position yourself to prevent a partnership disagreement. If this happens anyway, do your best to hash out a solution with your partner. In the event that you can’t talk through things, review your contract, learn more about your legal rights and decide if alternative dispute resolution or litigation is the next logical step.