Why It Is a Good Idea to Have a Business Partner Operating Agreement
know, like, and trust your partner, but not be as comfortable with a stranger your partner wants to bring into business. That’s something you can address head-on and resolve in your agreement. Another thing that can be resolved in your agreement is the extent to which one partner in
Many business partners have asked themselves, “How can I anticipate and resolve legal disputes with my business partner before they even happen?” And that’s a great question
because it shows that you’re taking control. One thing that you want to do while everybody’s on good terms and cooperating is to set your deal in writing so everybody understands going forward what the rights and responsibilities of each partner are, and what the duties of each partner are.
the business is allowed to engage in other businesses on the side. Will the partner be allowed to engage in businesses that compete with your business or merely businesses that are non-competitive with your business? You can also discuss the amount of effort and time and commitment that each partner is expected to contribute to the business. Along with that, you can resolve what each partner is going to contribute to the business.
If you lay a good foundation, then you can really build a great business on top of that foundation, so sooner is better. Another reason taking action sooner is better is because in legal issues, as well as in life, you always
have more options at the beginning of the relationship than you do if, heaven forbid, the relationship deteriorates in the future. You’ve got a lot more control over your circumstances, a lot more ability to negotiate and
This is just a small list of the many things you should consider with your partner and put in writing. And I recommend that once you’ve stepped into the business world, you do it right and do it with the assistance of an experienced business attorney. The experienced business attorney is going to have an outside perspective and also a knowledgeable perspective based on seeing these types of patterns and situations happen over and over again. The experienced business attorney will help you crystallize what your goals and priorities are as well as the goals and priorities of your partner. And then together, we can come up with a solution that best meets those goals and priorities. If you’re one of those business owners who’s being proactive and resolving to build your business on a great foundation, please give us a call with any questions you may have, and we will be happy to discuss those with you and strategize with you on how we can keep that foundation with your partnership solid.
come up with a fair agreement with your partner at the outset than you do at the end. Plus, if you use an attorney to help you put your deal in writing, which you should, the costs to put your deal in writing and use a competent business attorney at the outset is going to be maybe a fraction of the cost you would spend with that attorney two years down the road if you had a severe business problem with your partner. And so the cost of doing it right from the beginning is substantially less expensive than the cost of solving a dispute once it has come up. If you make the decision to protect yourself and your business and protect your partner at the outset, one of the best things you can do with your partner is put your agreement in writing. One issue we can address in your agreement is, for example, what would happen if there was a deadlock in the voting. If, for example, you and your partner are 50/50, how would you deal with a situation where you’re both well intentioned but you can’t come to an agreement on how to move forward with the business? And so, we would discuss beforehand and put in your agreement the way you both want to go about resolving a deadlock. We can also address a situation about what happens if a partner wants to bring somebody else into the business. You may
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