Some small businesses are created out of a partnership. Partnerships take advantage of the strengths of each partner for the good of the business. Additionally, the burden of starting a business is carried by more than one person which makes it lighter.
Unfortunately, you will most likely not agree on everything. What matters is how you handle the disagreements that come up.
With the knowledge that many business partnerships fail because of conflict between partners, it is important to start out on the right footing with an agreement.
This is a contract that is made between the business partners. It points out the responsibilities and rights of each partner right from the get go, heading off any problems before they even arise.
Some of the things covered in the agreement include profit disbursement, how much debt the business can get into, how one of them can exit should they want to leave the business and more. This ensures that everyone is reading from the same page.
It is a legal document that is often drafted with the help of an attorney.
Any proper partnership agreement will state clearly each person’s ownership interests. It could be 70/30, 60/40, or even 50/50. It will also have the details of the contributions made by each partner in terms of services, property or cash etc.
The rights of the partners will also need to be clearly stated. If there is a disagreement, who has the final say? What are the rights of the owners when it comes to selling their part of the business or give it out as an inheritance? Should one partner leave, how are their shares distributed among the partners that remain?
These and other rights must be clearly stated if you are to navigate a partnership successfully.
It is important to state how each partner will share in the profits and losses of the business. This is especially so if the money will not be divided equally.
The details should be clear in the partnership agreement that you draw up. Some of the things to consider will include allocation of profits, the percentage of profits reinvested vs. that which is disbursed to partners, how to deal with losses, how often to distribute profits, whether partners will get regular funds from the business and more.
Take time to work through the details of this area because money is a major source of conflict in partnerships.
This can take several different forms depending on what the partners would like to do.
Sometimes both partners can be running the business together, while at other times one partner will run the business while the other funds it. In some instances, you can find one partner is in charge of operations, while the other leverages a strength in numbers by handling the financials.
The important thing is to make sure that everything is being done and that no area of the business is overlooked. The partnership agreement should include the responsibilities assigned to each partner, and the managerial duties that they share.
Making sure everything is written down means that you can hold people responsible for their dockets.
One of the key benefits of having a partnership agreement in place is that it will help you avoid major conflicts.
Once everything has been discussed and put down on paper, most of the conflict issues have been resolved. However, it is important to understand that partnership agreements are not perfect.
You will often find that someone may have misunderstood something, or understood it differently, and in some cases, some may even think some things in the agreement are unfair. Your partnership agreement must have a clause on resolution of disputes.
Set out a clear process and procedure for handling any disagreements that come up. This may include taking a vote and arbitration or mediation.
This can happen due to planned or unplanned events. An unplanned event can include sickness or death, while a planned one may be the inclusion of a new partner. These scenarios should be taken into consideration such that the partnership agreement spells out what is to happen in such cases.
It should also talk about how to go through business dissolution. The point is to help you work through changes that may arise in the business structure without having to fight about it.
With time, you may find that you would like to turn your business into a corporation. The agreement needs to state how you can come to that decision and how you will handle the transition.
Since you are starting a business for the long haul, it is best to iron out the details ahead of time so as to avoid any nasty surprises in the future.
Ensure that you have a written partnership agreement.
If you need any further assistance, feel free to write to us and we will get back to you.
Admit it, most of us are unsure how to cross a cheque and to issue cheques. What is a cheque? What is that important piece of paper? A cheque is a document that directs a bank to pay the specific amount of money to the individual named in the cheque called payee, the person writing the cheque is known as the payer while the bank on which the cheque is drawn is always the drawee. In order to use a cheque, one needs a savings bank account to issue a cheque in their own name. That's where the money is going to come from. The transactions have to be handled carefully as it may lead to some serious fraud. You might come across cheques during business dealings or when taking Albeit being old school, writing cheques is one of the safest and most convenient ways to make a payment. How To Write A Cheque? With technology and internet banking, most of us would not get the chance to write a cheque. However, there will still be unexpected situations where you need to issue a cheque or receive one. You may think it is one of the easiest things to do, but you can easily mess it up. There are a few important things you should consider while writing a cheque so that someone cannot easily misuse it. #1. Avoid leaving..
Did you know that most of the world’s businesses are running on debt? On paper, they are not making a profit. But as they grow, their spending power and ability to diversify keeps increasing – and so does the size of the business. On the other hand, a majority of the businesses that lack fundamental planning in any of the core business aspects run the risk of getting completely devalued and indebted to the point where no one will bail them out, not even an investor who finds the business idea sound or a bank that wishes to give out more loans. What does that tell us? There are two types of business debts – good business debts and bad business debts. The dissimilarities between the two might be a handful on paper but it’s only when you look at the bigger picture do you truly understand what it means for a business to be profitable and successful even though it is running on debt. Of course, an important factor also lies in The whole point of this article is to help you understand these two types of debts so you can make better business decisions before acquiring more capital. The Difference In Broad Strokes Good debt means any capital you acquire to spend on assets that will generate more money over the long run. Bad debt means acquiring..
Are you new to finance? Don’t fret. The key to managing your own finances is to be well-informed so as to make wise choices. The good thing is resources are everywhere today, especially financial websites. We have compiled a list of 15 financial websites to help you out on your journey to discovering the nuances of the finance world from loan terminology to personal finance rights you should know of. We will categorize the list into the following categories: 1. Investing and trading 2. Personal finance 3. Specialists 4. Finance blogs 5. Insurance 6. Financial advisers Let’s get right into it. 1. Investing and trading #1. Investment Moats Kyith Ng has been running Investment Moats since 2005. He has been providing a lot of help to those looking to make heads and tails of finance and investments. He has some killer tips to grow your wealth. He puts a lot of detail into his articles and that’s one of the reasons why this resource is top on our list. The amazing selection of news pieces and statistics you find at Investment Moats is truly impactful to chart a better course of action for both, the short term and the long term. #2. Dr Wealth Originally started as BigFatPurse, Dr Wealth provides plenty of investment education to Singaporeans from all walks of life by publishing accurate and meticulously crafted guides. This..
Managing business finance can seem like a daunting task at first. It doesn’t have to be. Once you get a few processes down and understand the basics, it becomes surprisingly easy to work on your business finance. It, however, can take some time depending on which tools you use and the size of your project or business. Young entrepreneurs are the new generation of innovators. They make the world run the way it does. Their contribution to the modern economy is simply irreplaceable. Without budding entrepreneurs, we’d not be here. It’s important, therefore, to teach them how to best manage business finance. It’s easy for an entrepreneur to feel lost when it comes to the finances of the company. Even if they have the most brilliant idea in the world, a business doesn’t survive on ideas alone. Managing the finances and avoiding any cash leaks are extremely critical aspects to succeeding in any type of business. For some, helps them to move forward. SBL Singapore offers a wide range of business loans that can help entrepreneurs expand their businesses or fix their problems. For example, we offer business loans, business loans, business loans and Without enough funds, many entrepreneurs end up wasting precious time and making bad decisions. Singapore ranks among the world’s leading places in terms of cultural support for entrepreneurship, startup opportunities, process innovation, absorption of technology, and..