Tips for establishing a proper business partnership
Establishing a business partnership may seem easy – it’s just having someone to share the initial expenses and capital with, and just divide the profits as it comes along. But as with many things in this world, nothing is ever as simple as it seems.
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Take our word for it – we seen how underestimating a business partnership has resulted in disaster. And while it is always a matter of trust, money is money, so here a few tips to keep you safe in any business partnership.
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1. Run a background check.
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You’re not necessarily looking for anything criminal, but you NEED to know which what your potential business partner is like. What his or her history is, his or her background in business, his or her reputation. Knowing everything there is to know about your potential business partner will enable you to make an informed decision whether or not he or she is the right business partner for you.
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2. Have everything in writing.
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When you decide to go with the business, it’s important to have EVERYTHING in writing. Don’t leave anything to chance or say that you have absolute trust in your partner. Drawing up a legal agreement between the both of you protects you from any incidents that may occur in the future, any if your partner really is trustworthy, then you won’t need to enforce the agreement at all, so no need for you to worry.
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3. Take time to read the fine print.
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Also, make sure that everything is clear between the two of you before you sign everything. It’s important to understand the agreement well to prevent any confusion in the future. Don’t just sign a document out of trust. It’s essential that you and the other parties involved understand what exactly the agreement is all about.
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4. Establish procedures for everything.
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In establishing a legal agreement between the two of you, you need to determine the procedures for incidents like debt and disputes, profit sharing and how you’ll go about expansion. Should any of you decide to terminate the partnership of leave / sell the business to any one partner or to other people, the agreement should also cover situations like these as well.
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5. Consult with a lawyer
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You should also consult with a reputable lawyer to orient you with the local laws regarding partnerships so your agreement can be enforced locally – there are many kinds of partnerships, and you need to consult with a lawyer to know which is which and which benefits you the most.
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These are simple tips that will keep you out of trouble when establishing a business partnership. Don’t let other people take advantage of you just because you aren’t a local or don’t have the time to manage your business. Always make sure that you have a safety net over your assets and your business interests. It never hurts to exert a little more effort for this at the beginning of things because it’s your money that’s bound to go up in smoke in the end if you don’t.
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March 2nd, 2009 at 17:39
I totally agree with this article. This a business partnership, and even if it is among people who trust each other, have known each other for a long time and are good friends, money is money. You never know what might happen in the future and it is only prudent to protect yourself and your investment. Money changes people, and having everything in writing is an insurance not just for you but also for all the parties that are involved in the business. I think there is enough law in Thailand that protect people who want to establish a business there, except that many overlook it by having everything done verbally only.
March 2nd, 2009 at 19:18
I agree with the article also and with the previous comment. Money is money, and money changes people. I have personally been a victim of this phenomenon, as me former business partner bankrupted our company and ran away with all the money that was left. It’s a good thing that I was able to save myself with the little money I had left and have now established a new business, where I have made it a point to make every agreement a binding legal one. This way I am more protected from any sort of financial scam and my partner cannot just run away as he will be liable under the law.
March 2nd, 2009 at 21:57
Harryh and King:
We’ve seen so many people become victims of “verbal agreements” and end up losing a lot – not to mention the time and effort they put into the business, only to see it fail in the end, not because of bad marketing or bad business strategies, but because they were fooled by their partner. We’ve also seen many friendships destroyed by business gone wrong, which would have been avoided had they both agreed to have everything legal and in writing. It’s clearer and less complicated in the end.