May 12, 2020 in Misc

Common Business Partnership Problems

Business partnerships remain a fairly common business structure, however the majority fail within a 3 yr period. ⁣
Generally, partners enter a partnership too hastily without:⁣

1) first establishing formal decision-making processes (i.e. how are decisions introduced, how are they voted, what decision require unanimous consent, how will decision-making authority be shared?) ⁣

2) defining the partnership’s vision and existence beyond money terms. (e.g. will work requirements be structured around family? will this partnership have to come first?) 3) creating a compensation system that incentivizes working together⁣

4) factoring equity as a direct result of: financial contribution, commitment, and resources. After all, sweat equity is very hard to quantify⁣

5-6) having an accounting system in place. Bookkeeping and proper record-keeping should be made a priority from the start in order to accurately gauge progress and help in decision-making ⁣

7) establishing systems for addressing different stages of growth (e.g. scalability of processes)⁣

8) creating a partnership agreement detailing entry/exit clauses, responsibilities, operation, etc.⁣

9) having discussed roles of family members (mostly not a good idea)⁣

10) addressing problems as they present themselves

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