The Importance of a Partnership Agreement

by | Mar 10, 2023 | Business Partnerships

For many people entering into a business partnership, the only agreement they have between them is a handshake and good intentions. They are too busy creating a business plan and brainstorming about the future of their venture to care very much about what might happen to their business relationship in the future. Others are a little more forward-thinking and find themselves a generic, legal-sounding partnership contract online and print that out and sign it. The one thing that many new business partners overlook is the importance of discussion and real honest communication before the partnership is officially forged and the necessity of creating a partnership agreement that is tailored specifically to their company and addresses all the issues it needs to. Creating such an agreement calls for both partners to ask themselves, and each other, a series of rather searching questions and then answer them honestly. What would happen in the future should one partner wish to sell the business? Who is actually responsible for what? How will disputes that arise be mediated? They should also take the time to examine their differences in values, ethics, and personality and how those things could affect the success of the partnership in the future. Of the 70% of business partnerships that are born to fail many of them do so due to differences in opinion and unresolved conflicts rather than an actual problem with the business itself. When drawing up a partnership agreement remember that although you cannot predict the future, you can try to ensure that you plan for the unexpected as completely as you possibly can. If you’d like a guide that covers the conversations you need to have see Business Partnership Agreement Template that comes with a bonus What Ifs Scenarios Handbook. These will help you build your partnership for solid long-term success.