Busting the Myths About Business Partnership
Every year, people come together to form new businesses. Some of those new companies succeed but most fail within five years. Part of the reason for that high failure rate is that people struggle to make their business partnerships work. Below are three common myths about the partnership and the reality behind them.
Myth: You Don’t Need a Partnership Agreement
Legally speaking, you can form a partnership without any form of a written agreement. However, the reality is that even two people working together without a mutual understanding is almost impossible. It is very difficult to reach that shared understanding if you don’t spend time writing out a partnership agreement.
For example, think about who is going to do what works. Also, what will happen if you need extra capital? How will you deal with ownership if one of you wants out of the business? Answering these questions in advance can avoid major issues down the road.
Myth: Decisions Need To Be Quick
Many entrepreneurs want to get things moving quickly. They need to start bringing in sales and are energetic and motivated to get there. This can lead to business partners making the error of rushing decisions.
In reality, most business decisions need to be made thoughtfully and carefully. You can’t just rush forward and hope that you got to the right answer. Spend some time working together to think through and research your options. Sometimes you do need to move quickly, but a lot of the time you can invest more complete effort into answering your important questions.
Myth: You Don’t Need a Lawyer
There are tons of templates online to help deal with all the contracts involved in a business, why hire a lawyer? Although it is true that you can find templates and legal advice online, most of them are very generic. One of the most important things a lawyer brings to the table is familiarity with the law. In other words, a lawyer knows what you don’t know.
For example, you may hire someone to work for you. However, you may miss a major hole in the employment contract. This could lead to serious legal issues down the road. It is far better to hire legal counsel to help you navigate business law.
With these myths debunked, you will be better suited to form your new business partnership. Growing a company can be an exciting adventure, but you should make sure you are prepared before you jump in.