The social status of life has granted humans the opportunity to partner in so many areas- governments, schools, organizations, and businesses. Ambition, goals, and resources, have always been the reasons of partners coming together to pursue a common interest. However, the definition of a solid partnership relationship depends on the attention giving to considerable issues. Starting from the type of partnership.
Types of partnership
Over the years, partnership has been refined and redefined to conform to modern business status. Categorically, there have been forms of it enabling diversified methodology.
General partnership
In this system, partners form the body of the business. Everyone makes his or her contribution, however, taking management as well as liability responsibility. If a partner loses, everyone loses, if he gains, everyone gains.
Limited partnership
This form of partnership is like (General partnership), only that it allows partners to choose whether to be directly responsible in management activities or not. It also exempts those who chose (Limited partnership) above (General partnership) from much liability. Therefore, they are more like investors who only want to invest and make gains.
Limited liability partnership
Limited liability partnership gives partners the opportunity of limited liability. It uses elements of partnership and corporation to limit the liability of partners, from errors, incompetence or malpractice committed by others. However, when a partner or an employee involves himself in expensive acts of negligence, he is liable for his actions, it does not affect others.
If you really need it
Partnership should be considered when there is the need. When your business apparently requires additional skills and resources that you do not have. That is exactly when you should look for a partner, who has what it takes to move your business up. Otherwise, hire an expert as a contractor, and get him do the job for you. That is when you are considering a partner as an individual.
Knowing your partner
Individual differences always pop up and stall the progress of a business. Therefore, the first step to take when you are looking for a partner is (knowledge) about him and his goals, attitude toward business, and skills etc. Find out how motivated he is to share your goals.
Communicate
Communication would not only bring partners together, but will also help them to unravel their potentials. Talk to your partner about your expectations, find out how much he is willing to give for the growth of your business. There will be lots of things to share as the business progresses, do not keep vital information from each other.
Business or friendship?
Partnership is a business tie different from family and personal relationships. It means that legal documentation is needed to put things in their places. The tendency of allowing personal relationship to influence your principles, ethics, and objective is always there. The consistency of change takes effect on everything, including your most trusted friend. The long run may spit the venom of unseen intent, thus, make you vulnerable in a circumstance of break up. So get a lawyer, and put the terms and conditions of your partnership in legal documents.
Terms and conditions
What is there even to make a legal document? Not knowing what to put in agreement document may jeopardize your own interest, and give undeserved rights to your partner. Here are some points to consider-
- Host agreement-it defines the roles and rights of a partner to operate in a department
- Annual account-How financial input and output of a business could be analyzed yearly.
- Misconduct expulsion-when a partner commits unpardonable misconduct requiring him to leave the partnership
- Resolution of dispute- the pattern of settling would-be disputes, especially when they are so big to be handled internally
- Vacation-how much leisure time to be taken from work should be determined
- Liquidation- at a point when business could no longer go on, how to share assets becomes necessary
You can go to partnership agreement to get a copy full of the required subjects of partnership agreement.
Addressing these issues before you enter into partnership would not only protect your interest, but will set ethics and principles that your business will develop upon.
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