Stephen F. Aton
Those who have decided to start a business or purchase an existing company may wish to find a partner to work with them in the enterprise.
Choosing a partner is one of a business owner's most important decisions, and there are some important issues that must be taken into account.
Personality is important, particularly because partners will need to be able to work together. Business partners do not have to be friends socially, but they do need to have an effective working relationship that enables them to spend many hours together.
Business partners also must be able to trust each other, because their actions will affect financial well-being. A person who is trustworthy and reliable can cover for other partners when they are out of the office. Still, appropriate controls should be put in place to ensure that the business is run properly and accounted for finances.
Work ethic also must be factored into partnership decisions. If both partners are to participate actively in the business, their work ethics and business philosophies should be similar. If one partner makes a concerted effort and the other partner has other priorities, there will eventually be conflict.
Ideally, all partners should have backgrounds in - and understanding of - the particular business in which they are going to work. Having different experience in the same field can create synergy that benefits development of your new company. For example, if one partner has an accounting background, a partner experienced in sales could be beneficial.
All partners also should have an understanding of their roles. Each should have defined and definite roles but remain flexible because business circumstances and objectives can change. Defined roles, however, reduce duplication of efforts and provide for more efficient use of each person's time.
Both partners should have some financial stake in the business. One party may have a larger monetary investment, but a partner with no investment may not be as committed to the success of the enterprise. The partner who puts up the larger sum of money usually will demand controlling interest of the company.
Finally, a business should be set up and operated as a legal entity, such as a corporation or a limited liability company. The business entity will protect personal assets from unsecured creditors and formalize the agreement between partners. Regardless of which type of business entity is selected, there also should be a buy-sell agreement in place so that surviving partners will be able to purchase other partners' interests in the company in the event of a death or a desire to sell to an outside party.
[[In-content Ad]]
Stephen F. Aton is a Springfield attorney practicing corporate, estate planning and personal injury law. He may be reached at steve@atonlaw.com.
