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Do you have a solid partnership agreement in place?

Few things can cause as much dissension in a business relationship as a partnership agreement that is unfairly weighted in one direction or that fails to address common issues.

When partnership disputes arise, the partnership agreement should detail a path to their resolution, as well as provide guidelines for branding, corporate culture, growth strategies and other management philosophies.

A big mistake business partners make is to equate a good friendship with a strong management partner. While often friends do make good business partners, it can be a grave business error to assume that the friend who is an ideal choice to toss back a few cold ones on the weekends will make a great partner.

The vast majority of partnerships fail because the partners failed to plan for certain exigencies that happen with the business. They may have different sets of expectations for their shared ventures that makes even the smallest decisions chafe the other partner.

One way to avoid this entirely is to have a solid operating agreement in place from the beginning. These should clarify each partner's role in the partnership and also include protections and what compensation will be received. Ideally the operating agreement will be organic and subject to change and expansion with the business, but at least commit the bare minimum to writing before diving off into partnership with anyone.

Another important consideration to include is legal advice from a Phoenix business law attorney. Look at it this way — would you rather spend a grand now to get it right, or $100k to extract yourself from an untenable agreement with a partner who is ill-suited for your business?

Source: Forbes, "How To Avoid A Partnership Dispute," Shane Robinson, accessed Nov. 17, 2017

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