If your business faces litigation, it can be frustrating, costly and time-consuming. In some cases, it can also be highly detrimental to the future of the business. For example, a dispute between business owners could mark the end of the company if they simply cannot resolve the dispute in any other fashion.
Fortunately, there are steps you can take in advance to prevent this from happening. Smart business owners understand the importance of being proactive. Let’s take a look at some of the options that you have.
Use a partnership agreement
If you’re working with multiple business partners, or even just one other individual, it’s wise to set up a partnership agreement in advance. This can do a number of things for you, including the following:
- Specifying what ownership percentage you have.
- Setting up tactics for dispute resolution.
- Establishing your duties and roles within the business.
- Determining how business partners should be added or removed.
- Setting up steps to take if the business has to be sold or dissolved.
Essentially, you can just address a lot of potential issues while the two (or more) of you are still on good terms. In this way, it’s similar to creating a prenuptial agreement before getting married. It’s much easier to work together at this stage in the relationship, and then the agreement can help you if a dispute ever does arise. It can also prevent disputes by clearly defining things, like roles and payment, which are areas where disagreements often occur.
Put everything in writing
Another thing to keep in mind is that it’s wise to have all your contracts and agreements written out and signed. Don’t rely on something like a handshake or verbal deal. Often, disputes occur simply because two business owners disagree on what they talked about before. But if you have that conversation and that agreement in writing, it’s easy to go back and determine what next steps to take.
At the end of the day, being proactive can help your business and your future. Carefully consider all of the legal options you have so that you can avoid complications moving forward.