If you are considering starting a business, congratulations! If you are considering starting a partnership, there are many things to consider prior to the formation of your business. The goal of establishing a successful business partnership is to combine strengths and resources to grow a profitable business venture that withstands the test of time. Understanding the pros and cons of a partnership formation can better ensure that partnership challenges are handled appropriately from the very start. 

Partnership Pros 

If you are considering a partnership for your business venture, it is likely for several reasons, including the following: 

  • Bigger business network

  • Additional capital for startup costs

  • Another person to share the burdens of a new business

  • Shared vision 

  • Additional knowledge 

  • Mutual support and motivation 

Partnership Cons 

While there are many positives regarding a partnership formation, there are also some possible challenges, including the following: 

  • Potential conflicts

  • Possibility to ruin a friendship

  • Less independence

  • Division of profits

  • Jointly and individually liable (both partners are responsible even if one partner fails in his or her duty) 

Your Perspective Will Matter 

One of the greatest determinations as to whether or not a partnership will succeed is how well the partners work together. Before you enter into any type of partnership, you should first ask yourself if you are the type of person who wants to have a hands-on approach, do things solo, or have control over the outcome of a project. If you have worked for yourself for a considerable period of time, having to consult with another person may be a challenge for you. Additionally, you may work harder than your partner. How will you handle a work ethic discrepancy if the issue arises? If you have a low tolerance for inequity, or a strong need to be at the helm of the proverbial ship, a partnership may not be right for you. 

However, if you are the type of person that enjoys collaborative endeavors and appreciates the different opinions and views of others, a partnership may be perfect for your new business. Understanding what is important to you, and how you handle cooperative projects can help you determine if a partnership is right for your personality. 

Your Partner’s Perspective Will Matter

Oftentimes, an important deciding factor as to whether or not a partnership will be a successful one is based not only on who you are as a person, but who your partner is, as well. A business partnership is similar to a marriage. Both individual people matter, and who they are together as a unit also matters. Does your business partner have the same outlook as you on the business? The same work ethic? The same values and motivation? Does your potential partner have strengths and skills that match yours and are compatible? Do you communicate well with your potential business partner? Most importantly, at the end of the day, do you trust this person? 

If you are considering going into business with a friend or a relative, you should strongly consider whether or not this is a good match. If things do not go well, you may be losing a friend, or potentially cause familial division in the future. 

How a Startup Attorney can Help Form Your Partnership 

A qualified and experienced attorney can help address any potential conflicts and challenges before the partnership begins. This can help ensure that all parties are on the same page and that the expectations of the business are firmly established and understood by both partners. The following are some ways that an attorney can ensure that your business partnership has an excellent foundation upon which to build a profitable, successful future. 

  • Complete Vision Discussion. An attorney can help both partners come together to strategize regarding the entire business vision. This can help ensure that the correct structure and legal documents are created to protect both partners and the business as a whole. Everything from finances, start-up costs, expenses, intellectual property, branding, employees, marketing, production and the specific roles of all parties should be discussed. 

Details should be discussed including one-year, three-year, and 10-year plans. There should be determinations regarding fiduciary duties and who has decision-making authority with respect to different areas of the business. Determinations should be made about decision-making responsibilities and processes. Additionally, partners should plan ahead for resolving potential disputes. This complete analysis will help ensure that everyone is on the same page and that the business receives the proper legal foundation for the future. 

  • Contracts and Agreements. An attorney can ensure that the business is legally established  according to both state and federal laws. Additionally, a startup attorney can advise both partners regarding what legal documents are needed to best operate the business in the most efficient and cost-effective manner. Although no two people want to think that their business will fail, an attorney can also help draft documents related to the termination of the business to ensure that both partners have their legal rights protected. Navigating all of these legal documents, determining which ones are necessary for your individual needs oftentimes requires the expertise of an attorney. 

  • Support With Legal Matters. Oftentimes, these business discussions between partners will determine that additional legal matters should be addressed such as trademarking the business name, attempting to obtain a patent for a particular device, or other intellectual property matters. In other cases, an attorney may be able to help analyze legal documents that present themselves such as a lease agreement, contracts with vendors, help with employee benefit legal issues or employment contracts. Having an attorney assist you with your partnership formation and beyond offers you an ally who is invested in your business success. 

Contact an Experienced Startup Attorney 

If you are considering starting a business partnership, there are many things to consider. Visiting with an experienced business attorney can help ensure that your new partnership starts off with a solid foundation. As an attorney practicing for over 15 years, as well as the owner of several successful local retail businesses, Itai Klein can help clients with all of their startup business needs. Contact the experienced startup attorneys at Klein Law at (310) 295-2261 or fill out our online form today.