3 Things to Know About Going Into Business With a Partner (60-Second Video)
What to consider before teaming up with a partner.
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Going into a business with a partner? Here are key things a partnership agreement should have to ensure smooth sailing.
1. Determine how ownership interest will be shared. It’s not always split evenly down the middle, so be sure ownership and authority proportions are stated clearly in the agreement.
Related: Everything You Need to Know About Business Partnerships
2. Establish how decisions will be made. If you own the business 50-50, there’s a possibility of a deadlock. To avoid this, some businesses set up a trusted associate who may own 1 percent of the business and whose vote can break a tie.
3. If one of you wants to withdraw, how will a buyout price be determined? Agree in advance that a neutral third party, like your banker, will find an appraiser to determine a fair price.
Watch more 3 Things to Know videos here
Going into a business with a partner? Here are key things a partnership agreement should have to ensure smooth sailing.
1. Determine how ownership interest will be shared. It’s not always split evenly down the middle, so be sure ownership and authority proportions are stated clearly in the agreement.
Related: Everything You Need to Know About Business Partnerships
2. Establish how decisions will be made. If you own the business 50-50, there’s a possibility of a deadlock. To avoid this, some businesses set up a trusted associate who may own 1 percent of the business and whose vote can break a tie.
3. If one of you wants to withdraw, how will a buyout price be determined? Agree in advance that a neutral third party, like your banker, will find an appraiser to determine a fair price.
Watch more 3 Things to Know videos here
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