Ruby McKenzie
There are many successful business partnerships, with two entrepreneurs with different skillsets that combine to give efficient business management. It is often the case where two employees decide to set up their own business and after some preparation, they both resign and focus on their own business; if they work well together, a partnership can be dynamic, both parties working in unison, while being responsible for different aspects of the operation.
Drawing up a partnership agreement
If you are preparing to set out on a venture that is co-owned by you and a partner, it is critical to draft an agreement that covers every aspect of the business. The best idea is to contact a leading Australian shareholder agreement lawyer and let the legal experts help you and your partner draft an agreement.
Important aspects to think about
- What happens if one partner dies? In the event of one partner passing, the other co-owner should be able to buy their shares and pay the deceased person’s estate.
- Forced exit – What happens if one partner fails to maintain their responsibilities for any reason? There should be provisions for one shareholder to force the other one to exit the business if specified requirements are not met. This means you both have to sit down and discuss all possibilities; a business lawyer can certainly help with this, as they have extensive experience managing business conflicts.
- Working capital – If the investment is 50-50 down the middle, this should be stated in the agreement.
- Define shareholder roles – Each partner should have a list of things they are responsible for; clearly defining roles avoids misunderstandings at a later time and both parties know what they have to do.
- Decision making – It is essential that you include information about decision making; if one partner is more knowledgeable regarding one aspect, they should be the one to make decisions, while general decisions should be jointly agreed and you should not proceed until an agreement is reached.
- Joint goals and objectives – The business should have firm and clear goals, which both stakeholders agree to; you need to take a balanced approach regarding goal setting, setting goals over at least a 10-year period, if not longer. Every business needs firm direction and it is the role of management to ensure these goals are known by all employees.
Create a business plan
Both shareholders should work together to create a comprehensive business plan that details every aspect of the operation. If both partners are involved in putting this plan together, it should lead to a positive understanding and working together to manage the business as it grows.
Source an established legal firm
It is much easier to draw up a comprehensive partnership agreement if you engage the services of a local law firm with experience in commerce. You and your partner can share a Zoom call with the lawyer, which gives the legal professional the information they need to start drafting the agreement.
