All of us have dreams and we need to work extra harder to turn those dreams into a profession when we get into our adult life. Most of us dream not only to live our lives comfortably but also to have our desired profession as a source of income if we pursue our dreams. Can you imagine how good that would feel? Earning from something you enjoy doing is liberating. Some people are still working hard for that dream to work, while others already have attained that. But, if your dream is building a business, then there is no denying that in order to do that, you need to have a great vision and a great partner to share your struggles and victories together. You may also like partnership agreement key clauses.
Successful businesses like Apple and Microsoft were not anchored by one man alone. These companies are successful because of the two people being involved in the business. In other words, they had a partnership agreement. In this article, we will explain to you what a partnership agreement is and what it is composed of. Aside from that, we will also be providing templates. By the end of this article, we will give you ways on how a partnership can be successful. So, if you are planning to build a business with someone, stick around and get ready to take some notes.
To build a powerhouse business like Apple, Facebook, Twitter, and Microsoft, the creators had partners. These partners shared the same vision for the growth and success of the company in the years to come. Being a “partner” simply means being with that kind of person for a period of time. If you put it in the context of an agreement, a partnership agreement is a written agreement between two people who will go hand in hand to work on a business that both of them envision to be profitable in the future. It also has elements in the agreement in which it entails the functions of the partnership, which will be discussed in a short while.
Most partnerships of successful businesses were formed even before signing legal contracts. These usually start out as friends sharing their own ideas and start to see the similarities between those ideas and have a vision for a profitable business after. So, if you have a friend out there who has a couple of great entrepreneurial ideas, hang out with him and formally or informally talk about what kinds of business can be effective five to ten years from now, and see if your ideas fit with him. Who knows? Maybe you two can be the next Steve Jobs and Steve Wozniak or Microsoft founders, Bill Gates and Paul Allen.
An agreement is like a policy because people who are involved in the policy have to adhere to whatever it states. That is the same with the two people involved in a partnership contract or agreement. In the partnership agreement, there are elements or parts in which the two people involved should read and understand clearly in order to avoid misunderstandings in the future and knowing where to limit oneself. In this section of the article, we will be giving you the elements of this kind of agreement to guide you if ever you are planning to make your own partnership agreement with your potential partner in your upcoming business. Here are the general elements that are present in most partnership agreements between different corporations and businesses. Take note of the following as these terms can be hard to understand especially if you have minimal understanding of the business life.
1. Name and Nature of the Business. This section is where the name of the company is stated and what it is all about. Basically, it explains what the business plans to create and do that would be beneficial to the community outside of the company. It is important for the creators of the agreement to make this statement specific so that it would be readable and understandable not just for both persons but also for the people who would read this portion of the agreement. The nature of the business section is not only present in the partnership agreement, but it is also part of the description of the business whenever people would search or ask what is the business all about and what can it offer.
2. Starting Date. This part states when the partnership will officially start. Even if you built the business long before as friends, this part is still important to make things more legal so that it can go through the approval of the state or government whose responsibility is to approve such business permits. You may also see partnership contract templates.
3. Interests. This section will state how much of the profit share will one hold. If the agreement is between two individuals, it will most likely be 50% for both. But, if other corporations want to join the partnership, then the shares will be divided even more. So if you and your partner decide to welcome another partnership, you have to make sure that that corporation is quality driven and the things that he could offer can be really beneficial for the company and its products and services being distributed. You may also see general partnership agreements.
4. Bank. This part of the agreement will identify which bank they will trust their funds with and what to use.
5. Involuntary Withdrawal. This is written for the purpose of when a partner can be dismissed or fired in the company. It happens in cases where the partner has been inconsistent and not doing what he is supposed to do to contribute to the growth of the company. So if you have a partnership with a close friend, you have to be professional in matters like this and not let your personal relationship with him affect your decision. You may also see partnership agreements for restaurants.
6. New Partners. This set forth the agreement that the co-owners will only accept another partnership if both of them agree on it and know that it can better benefit the company’s future. You may also see business agreement templates.
To know more of what other companies are stating in their partnership agreement, just download the templates we have provided here to further guide you in understanding this kind of sample agreement in a better manner.
A partnership can never be successful if both will not work for hand in hand and have a sense of teamwork. In this part of the article, we will be giving you tips on how to let your partnership last and be successful despite struggles that might find their way to you. So, if you are now with your potential partner for a business you both envision would exist a couple of years or months later, take note of the following:
1. Be Clear on Your Vision and Mission. You both have to agree what you want for the company and how the products or services can affect the community. This is where you draw out your individual opinions and look for an area where you all can agree upon or even enhance. Don’t be afraid to say that you don’t find his idea or vision that good, but be polite in addressing so as to avoid unwanted conflicts and misunderstandings. You may also like agent agreements.
2. Talk About Money. This might be deemed uncomfortable and hard when it comes to who gets the most profits from the products and services. But knowing how to wear the friendship hat and be professional at the same time is a great skill an entrepreneur should have. You guys have to sit down and know which character you are going to play especially if the agenda is about money. Tell him what you want and encourage him to tell you what he wants and that he can disagree at any time. As much as possible, do not let it get too personal for this might affect the decision-making process and the argument can escalate further. You may also like sample general partnership agreements.
3. Decide on the Leader. Despite the business being anchored by a partnership, you both have to decide who has the right and is qualified to be the leader in situations that no one can agree on because of different views and opinions.
4. When in Conflict, Solve it. If both individuals get into an argument, they should find a way to solve it so that it won’t affect the growth of the company. Finding ways such as hiring a conflict management expert or just merely talking it out and handling things professionally can treat the wound so that it will eventually heal afterward. But having arguments is also a good sign because it shows both individuals care for the company and this would be a test if how long one can keep his or her pride down for the security of the partnership and the friendship. You may also see simple partnership agreements.
5. Decide on Who Will be Accountable for a Specific Thing. This is important so that there would be no blaming if his own duties and responsibilities were not met. Blaming can cause conflict and lessen the mutual respect for one another if this behavior is consistent and persistent. You may also like formation agreement templates.
It is important for both partners to apply these tips so that objective of the company will be met in the future, despite obstacles that might try to hinder that success. It is in inconsistencies where we find our shortcomings and failures. Do not ever let that get in the way because if you do, the mission and vision would not live up to their statements. You may also see patent agreement templates.
Most successful business partnerships started out as friends working together. If you do not believe us, just search it on the internet. It is amazing how far friendship can take you into this world. If things would go down for you and your partner, just remember how you guys first started and how far you’ve gone together as partners and as friends. In a way, this can help ease any conflict and motivate you because you can recall the simple beginnings you experienced together way back.
A successful partnership can never be successful if both do not have constant communication. That is why it is always important to talk out your concerns instead of keeping it quiet so that your partner would listen and understand. Both of you should know how to listen. It’s important to remember not to let your pride get in the way as it might destroy the business or even the friendship itself. Be wise and learn when to be professional and when to be a friend with your partner. You may also see printable agreement templates.