Starting a partnership is exciting, as you are likely enthusiastic about your business plan. You may be so focused on finding facilities or developing a prototype that you don’t stop to think about the importance of an agreement with your partner(s).
There are multiple reasons why you should consider creating a written partnership agreement before you make any contributions to your future business venture.
A partnership agreement clarifies your obligations
You may have some assumptions about what each partner will do for the business, and they will likely bring their own preconceived notions to the table as well. Only by explicitly talking about what each of you intends to do for the business and what you need from each other can you ensure that you are in full agreement.
A partnership agreement establishes a long-term game plan
The many considerations involved in starting a business can overshadow long-term planning in the early stages of business development.
When you develop a partnership contract, you have an opportunity to include an explanation of your five and even 10-year goals for your partnership and the business you start together. Setting goals and having a long-term plan creates not just accountability but also guidance when things change in the future.
Your contract can give you a clean exit
A partnership agreement can do some of the same things that a prenuptial agreement does. You can talk about when you might dissolve the partnership or how one partner can buy the others out.
By discussing the end of the partnership and what that will mean for the business in the agreement, you know what to expect in the future. Thinking ahead when starting a business will make it easier for you to protect yourself and succeed in your new venture.