There’s a bus company that was started by two friends but when of them died his kids decided to split with the other owner because they didn’t understand and appreciate the nature of partnership their dad had with his friend. That was the end of them and the business, they failed to run the new business after the split.
There’s another business I know where two friends came togther, one had the idea the other the money. When the one with the money gave it to the one with the idea the one with the idea mishandled the money and now they’re fighting to split the business but it’s going to be a messy split from what I see.
The biggest problem with most partnerships is how they’re built. Most are built on a weak foundation from day one which means they’re built to fail and it’s only suprising when they survive.
Business partnerships are not about coming together with your childhood friend/s or long time neighbor and saying come lets work. It’s also not about finding people who aren’t showing interests in the business and dragging them into it because you think you see something in them that would help spur the business. Don’t bring on board people not willing to come on board. If you have to drag them into the business kicking you’re better off without them to start with trust me.
The one key documents most people never consider when going to partnerships is a partnership agreement. Its not enough to register and have your names in the articles of association with how much every one’s stake is in the business. Before you actually get there have a working partnership agreement. This is your constitution/rules of engagement name it. You need to seat and agree on how your going to work togther. You can’t say we shall see that a head, no do it from the start when there’s nothing at stake.
Decide what every one’s contribution to the venture will be and state it clearly that every one can only claim their stake after fully delivering on their contribution. If it’s money say 10M then they can only claim their stake when they bring the 10M in full. If it’s sweat equity then say you can’t claim your stake until after a year or two of working in the venture and meeting certain deliverables. Decide how you will add more money to the business. How you’ll handle more money from partners incase the need for money arises and there’s a partner willing to bring in the money.
Decide what happens when a partner is dead or unable to meet their obligations as partner. What happnes when there’s need to add new partners on board? Then protect the partnership by adding clauses that discourage partners starting or involving themselves in a competiting business so you won’t have a partner who’ll think to themselves why don’t I go out and go start a simailar thing on my own and have all the money to myslef. You can even add that incase a partner wants out they would have to take two years before starting a similar business this way going out becomes a hard propsect for partners hence pushing every one to concentrate and grow whats there. This document can be taken to court and made legally binding document. That’s how partnerships out there last, you need to build a foundation that makes them last.
The lack of this creates a weak foundation that makes it easy for partnerships to collapse for selfish and the flimsiest of reasons
Jaluum Herberts Luwizza is a Speaker,Writer, Columnist with the C.E.O Magazine and Contributor with the Nile Post.He is also a Business Consultant with YOUNG TREP East Africa’s No.1 Business Management and Consultancy firm that helps people start and grow profitable businesses.twitter:jaluwizza
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