CONSIDERATIONS FOR ENTERING A BUSINESS PARTNERSHIP

By Ann Vanino

If you are considering an opportunity to enter an existing business partnership or forming a new one, here are some things to think about as you make your decision.

Ownership

  • What ownership percentage do you want? Ownership share is highly significant to your status in the organization, financial prospects, and role in decision making.
  • What are your liabilities as an owner of this company? What insurance do you need? Will you be listed on the various insurance policies? Do they plan to or have appropriate insurance to protect you as an owner?
  • How is the company structured? Is it a Subchapter S corporation, partnership, or C corporation? Review the set up papers and by laws. Will you be an officer? Is there a Board of Directors? Who is on it? Will you be? In what title and capacity?
  • Do you have to buy your ownership share or otherwise pay into the company? What are your ongoing financial responsibilities?
  • What is expected of you as a partner or owner?

Financial

  • Will you be paid a salary? How is your compensation determined? Is there provision for bonuses or profit distribution? How is profit determined?
  • Does the company provide benefits?
  • What expenses does the company cover for owners?

Role in Company

  • What is your title? What are your responsibilities?
  • What kind of decisions will you participate in? What financial and other information will be shared with you and how often?

Marketing/Sales/Business Development

  • What is your role in these areas? Will you be responsible for a specific amount of marketing, sales, or business development? Will you be compensated for this? By what formula?
  • For existing companies, what is the marketing, sales, and business development plan? What base of business do they have now? What do they project for the future?

Long Range View

  • What is the vision for the company? How long do they plan to be in business?
  • What is your role in helping the company grow?
  • What happens when an owner leaves (you or someone else)?

©Copyright 2001-2015 by Ann E. Vanino
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