When choosing a business form for operations many business owners consider a partnership when first starting a business. It's a tempting proposition to have someone who can help share the workload and bring ideas to the table. It is also important to remember that the partners are jointly and severally liable for partnership obligations and actions. Using an LLC instead can minimize the exposure of the individual members for liabilities that are rightfully only that of the entity. That is why general partnerships are infrequently created now that LLCs can be more creative, useful and protective of the members.
However, if you are considering a partnership, it’s important that it has these key traits to be successful:
Companies need to adapt to a constantly changing business environment. This makes flexibility a key aspect of any partnership or an LLC that operates similarly to a partnership.
Embracing an emerging technology or taking advantage of easy marketing channels can give your company the leg up it needs. To be open to these kinds of opportunities, both you and your business partner need to be flexible.
Dismissing opportunities because they do not fit the current plan can severely limit your business's potential.
While this may seem obvious, if you do not trust your partner to run the company then you are not on equal footing.
An imbalance in skills or responsibilities may not seem like a big deal at first but the longer it goes on, the wider the gap. Soon enough, one of you will seem expendable and that is terrible for a partnership. If you're considering a partnership, make sure it's one of equal value.
Business can be hard. It's just part of being a business owner. This means there will be times when you have to tell your partner they're wrong, or that their idea isn't going to work. The same will happen to you. If you cannot be completely honest with your partner at all times, you need to reevaluate the partnership.
Open communication between you and your partner must be a certainty. Your business will suffer if you cannot address issues bluntly and without reservations.
Evaluating partnership potential
It's important that you understand the short and long-term effects of a partnership. Examine every angle. Make sure the potential benefits outweigh the risks before committing to a partnership. A business partnership can be a competitive advantage to a company only if it's an effective one.
If you’re considering entering into a business partnership, a skilled business attorney can be a valuable resource. They can help you create a thorough partnership contract that meets the needs of your business and your partner.