Owning and operating a business is an expensive venture. As a result, people will often seek out a partner to help share their work and financial load. Onboarding a new business partner is a serious step and not one you should take without some level of precaution. Learn some of the factors you should consider before agreeing to a new partner.
Whether you plan to set up the agreement with your partner as a 50/50 ownership or you will own more of the company than the partner, it's important that you have some knowledge of their financial situation.
In the event of an issue with the business, you want to have confidence that your partner will be able to meet their end of the agreement. Ask for a financial review and don't overlook any red flags that make you suspect the person is not equipped to take on this level of financial responsibility.
Have an in-depth conversation with the potential partner to determine what their goals are concerning the business. For example, is the person simply looking to play a silent role, earn an extra percentage over their investment, and then have you buy out their partnership, or is the person looking for a long-term relationship?
You want to find out what their intentions are to ensure their wants are in line with your own needs and goals for your company, especially if you birthed the idea on your own. An assessment of these goals will also help you with drafting a contract that keeps the interest of both parties protected.
Even when it's a silent partner, you need a partner who is committed to doing whatever it is they have pledged to do. When you have a partner that is not working just as hard as you, this will create an unnecessarily stressful experience.
If you don't know the person, it might be challenging to determine their commitment level, but you can look at their previous business relationships to get an idea; you may even ask for references to give you a better gauge of just how much of an effort they're going to put forth towards the collective goal.
Make sure you're taking your time during this process to ensure you're making the right decision. From reviewing contract agreements between you and the new partner to determining how the business will be structured, an attorney can assist you with these processes and more. To learn more about avoiding a potential business litigation, talk to an attorney today.