How To Create A Business Partnership Agreement
Daniel Nathanson, Ph.D. from UCLA Anderson Graduate School of Business, gives important tips to new entrepreneurs about the proper steps that should be taken when forming an agreement between business partners. No one expects the worst, but a business partnership agreement can save your business if things go wrong.
Most teams start with a partner or a few partners who share the same vision. It is important that you start off understanding each other's goals for the future and what they want out of the business. You should understand each other strengths and weaknesses, their assets, and limitations. You should go to a lawyer and hash out a partnership agreement which is like a prenuptial agreement. A partnership is like a marriage, and believe me, you're going to be spending a lot more time with your business partners than you are with your significant other.
So a corollary to this is don't go into business in spite of your partner, go into business because of your partner. I once made that mistake because I love the business idea so much that I told myself I could deal with him and make the business great anyway. The partnership ended within a year, and it was a very bloody divorce. The only saving grace is I did have that prenuptial agreement in place.
So an important element when finding a partner or hiring key employees who not only share or buy into your vision is to find people who are smarter and more knowledgeable about their particular function than you are. Many entrepreneurs don't have strong enough egos to get people who are smarter than themselves in helping them run their business. Get people who are smarter than you who can do each function better than you. Being part of a group of smart, passionate people working as a team to reach mutually agreed on goal is one of the greatest experiences you will ever have and will in all likelihood create by the virtue of that team a solid foundation for a successful business.