Going into business with a partner, whether it be a partnership or a company, is an exciting time for any business entrepreneur. The hunger and determination for success is a powerful motivator and what could be better than sharing that experience with a close friend, colleague or family member; someone you can trust.
But, the harsh reality of business is that it’s tough. In fact, studies show that in the UK up to 50% of start-up businesses fail and when a business goes through a stormy patch, it’s sometimes surprising to see who is the first to ‘jump ship’. Whilst it’s obvious that all businesses need to avoid unnecessary expenses, investing in a carefully constructed Partnership or Shareholder Agreement could potentially avoid conflict, should it arise further down the line.
All too often, business partners fall out for various reasons and without an agreement from the outset of how these situations are to be handled, things can get very costly, very quickly. A disagreement on who has the final say in a decision or whether or not a new business partner is to join the enterprise, turns into Court fees, Solicitor fees, Barrister fees, Accountant reports – the list goes on.
Partnership and Shareholder Agreements set out the rights of each member and what is to happen should there be any disagreements; the aim is always to avoid any need for legal action. All businesses should aim to be proactive, rather than reactive, and a good Partnership or Shareholder Agreement just might be the best asset your business owns.