A successful partnership is a rewarding part of a good signmaking business. A partnership means shared responsibility and greater productivity, provided the partnership is a solid one.
However, it is not always easy to find a partner you can work with. Sometimes problems will arise, and these disagreements can ruin your company. That is why a written agreement is so important. Read on for more.
The trick to finding a partner is similar to finding a marriage mate. You want someone who you get along with, and that compliments your skill set. For example, if you are great at operations but awful at sales you will want to look for someone strong in sales. This will not only balance out the business, it will also make dividing the work load easier.
Before you get started with a partner, consider the following questions:
- How well do we argue?
- How has he handled past failures and successes?
- What is his attitude towards money?
- How does he respond when times are tough?
- How do I think the company should grow?
Once you have these answered, you will have a better vision of what your prospective partner is like, and how he will be in business with you. The next step is to talk to your attorney.
Take all the proper legal steps to set up your partnership. Divorces are pretty much clearly defined in courts; splitting up business is not. If for some reason in the future the partnership needs to end, you need to have a clear division agreement in place from the start.
Make a shareholder’s agreement that states how you will split up the business. If there are only two of you, and your stake in the business divides to 50-50, what provision will you have to break a tie? You might talk to your attorney about the “Texas draw” provision. It allows one partner to buy out the other partner. The partner has a choice to either take the buyout or buy the business himself for the same price. Having such clauses keeps the business from splitting unfairly, or remaining in gridlock because of an evenly split vote.
Financially speaking before you form a business you should do these 4 things:
- Decide who will control the money and get an outside firm to oversee it.
- Get a good bookkeeping system in place and use it regularly.
- Find an accountant whom neither of you have personal ties with.
- Understand your cash-flow statements.
Also answer the following questions:
- How will the company’s money be spent?
- What is each partner’s spending budget?
- What are the limits on each partner’s current and future investment?
- What is the minimum salary that each partner needs?
- How long can each partner go without being compensated?
- What provisions are there for partners investing different amounts?
Communicate with your partner openly. Resolve issues quickly and never turn employees into pawns. Go into business with a person that you know, trust and respect.