The first few months of your partnership can make you think everything will run perfectly, just as you envisioned. However, the good times may only last a while as things could change along the way, and you may no longer get along with your partners like before. A misunderstanding could be the beginning of the downfall of an otherwise successful venture.
As such, it is best to stay ahead of the situation and avoid a potential fallout with your business partners. A well-crafted partnership agreement that provides clear directions in case of partner disputes can be the lifeline of your business.
Your partnership agreement could help resolve disputes
Even when in a business partnership with a close friend or family member, it is advisable to have a comprehensive partnership agreement detailing each party’s duties and responsibilities.
A business can test even close friendships or blood ties, and resolving disagreements can be difficult without a formal agreement. However, if everyone clearly understands their duties and responsibilities in the partnership, it will help avoid disputes in the first place.
Importantly, your partnership agreement should also include a dispute resolution process that partners should follow if there is a misunderstanding. Having a well-outlined procedure for handling partner disputes will help address issues that arise before they spiral out of control.
How effective is your partnership agreement?
A partnership agreement is essentially the constitution of your business, and you cannot risk any loose ends or ambiguous language in this crucial document. Therefore, you must ensure that it addresses every likely scenario that could affect your business operations, like disagreements among the partners.
If you are in a partnership or are thinking of partnering on a business, it is worthwhile to have a properly drafted business agreement that protects both individual and business interests.