You and your closest friend have been discussing starting a business together for some time now. Finally, you both are ready to make your dream a reality. You have decided to enter into a partnership and share equal responsibility for managing the company.
Before you two legally establish your partnership, you’ll need to take a moment and consider the potential pitfalls that could derail your plans so that you can address them effectively. Yes, partnering with your friend can be very beneficial, allowing both parties to partake in the decision-making process and share the earnings. However, it’s also important to be aware of the problems that can harm your business and your relationship with your friend alike.
Potential challenges to consider proactively
In any business, some issues can be problematic for both a company and the business partners who run it. Ask yourself these questions before committing to an approach:
- Do you have a written contract in place? If not, you need one.
- Will your friendship survive if your business fails? Regardless of how you go about it, business must take priority over friendship if you choose to launch one and keep it operational. This may lead to issues with your partner and even lead to the breakup of your friendship.
- How will the two of you handle disagreements? If you do not think about it now, it could seriously harm your friendship and your business in the future.
- Are the two of you willing to make concessions when needed? Or will losing your autonomy cause your relationship to fall apart?
- Do you have an exit strategy? You must have a well-defined strategy in place that permits either partner to leave at any time, subject to any well-reasoned conditions that you and your legal team construct.
Being aware of potential issues before entering a partnership can help the two of you have a great experience. Before you sign on the dotted line, seek legal assistance to help you iron out the details in informed and enforceable ways.
