Business Partners

Business partnerships are one of the most unique and trying relationships we will ever enter. Some work, but most fail. Here are four warning signs that our relationship with our business partner(s) may be headed for failure. Please note that this article assumes that business partnerships are in the Sendirian Berhad.

No Operating Agreement - many states do not require a Sdn Bhd to have an operating agreement, and, therefore, many business owners and entrepreneurs do not understand the importance of this legal document. The operating agreement is the agreement between all of the owners, or members, on how the business will run, who will be in charge, and so much more.

It started with three friends getting excited about an idea. As time passed the expectations, time commitments, investment, and basically everything else related to these "equal" partners fell completely out of balance. Arguments replaced friendship and greed supplanted a desire to share everything equally.

Partner Pride -This is something that usually shows up when a partnership begins to have struggles and accelerates its demise. Partner's pride allowed him to minimize his main partner and falsely establish himself as something he was not.

Compensation and Equity are Confused -Let me be as straight-forward as I can with this topic. Too often I see entrepreneurs, founders, and business owners that confuse equity and pay/compensation. These two items must be separated in order to set your partnership up for success. Please note that the legal and tax structure of the business may determine the best ways to receive both wages and profits, but that should not dictate the separation, at least mentally and emotionally, of the two.

Beginning without the end in mind -perhaps all of these points lead to this one - the need to contemplate every way the partnership will need to end or be dissolved. In addition, beginning with the end in mind implies that a partnership will have planned exits as well. Selling a business can be very rewarding, and a partnership needs to look down the road to how each of the partners will exit.