When you’re starting a business with a partner, it’s critical that you choose the “right” person with whom to work. Not only do they need to have the qualities that will make your business stronger, but you need to know that they are someone you can trust. Choosing the “wrong” partner vastly increases the odds of litigation in the future, which can be very costly and stressful.
How can you know if your business partner is likely to cause a dispute? Here are some red flags to look for that may warn you about what the future holds.
They don’t want to sign a partnership agreement
It is critically important for business partners to have a partnership agreement in place. This contract should treat each person fairly and provide guidance on things like your roles within the company and the compensation you will receive. If your partner refuses to sign a document that is clearly fair and beneficial for everyone’s interests, it can lead to major issues down the line.
They have a questionable history
If you don’t know this person in advance, look into their business history. What does their credit score look like? How long do they tend to stay at a business? If you see a pattern of behavior that is concerning, you can trust that the same things may occur at your new business.
They’re not good at communication
Many business disputes essentially stem from a lack of communication. This can lead to misunderstandings, some of which could be critical. You should also consider your work life on a daily basis. If someone doesn’t ever respond to text messages or pick up their phone, is that someone that you think you can work with successfully?
Choosing the right business partner is a great first step toward launching a potentially successful enterprise. Unfortunately, it does not guarantee that disputes and litigation won’t occur. If you find yourself in this position, you will need to know about all of your legal options and to seek legal guidance as appropriate.