Common Mistakes That People Commit in a Partnership
Google and Microsoft are two examples of business partnerships founded by friends. How can you hope to achieve the same success when starting a business with a friend?
Find out what are the mistakes that you should know about in order to avoid them when starting an enterprise with one or two of your close friends.
We all know that business is a risk. When we go into a business, there is a possibility of gaining a lot of profit or losing a lot of your investment. That’s the tough reality about it; there are only two possible outcomes for it. If you’re entering into a business with a close friend, you are risking that friendship as well. If the business goes sour you might come into conflict with your friend cum business partner.
Of course nobody wants that to happen. It is possible to avoid problems from arising as you conduct business partners. To do that, you must be able to find out about the common mistakes that most people make when forging a partnership with a close friend. These mistakes are the kind that seem small or insignificant in the beginning of the business relationship, but can actually lead to big problems and disputes later on.
The Failure to Carefully Lay Out the Partnership
Most people are too trusting and too complacent to take the time to lay out the foundations of the partnership when starting one with a friend. That is because they assume that they will automatically get along well since they already know each other. This is a very erroneous line of thought to go along with; there are aspects about your personalities that don’t matter in friendship but can otherwise affect the business differently.
The most common attribute to look for is financial responsibility. If your friend does not know to handle to exercise sound financial management, then you as a partner will be liable for it when that financial incapacity causes problems to the business. Taking some time to talk over the details of the partnership agreement can reveal that early on so you can avoid such problems in the future.
Failure to Secure a Partnership Agreement
Sometimes this mistake is connected to the first, since the failure to cement the details of the partnership generally results into a lack of a partnership agreement. Sometimes this is also a result of lack of foresight; some friends turned business partners forget to secure a legally-binding partnership agreement even though they have committed to a deal between them.
The written partnership agreement is undeniably important to the business. That is because it helps to wrinkle out disputes later on. The agreement is a clear statement as to the individual responsibilities of the partner; in case of dispute, partners can refer to this document to know whether or not the item of dispute falls within whose responsibility.