In a recent articles in the Denver Business Journal, Sarah Hogan outlines the benefits of a “partnership charter” in building a platform for the long-term success of your business.   The article recognizes the roles of attorneys, accountants, and business advisers in structuring a new business for success, but highlights that fundamental issues such as the goals, communication styles, skill sets, and trust levels of the partners are often overlooked. 

A “partnership charter” is intended to address these issues by outlining the day-to-day rules of engagement between partners that dictate how partners interact, make decisions, and address family pressures.  Although a partnership charter is not legally binding, it can drive the way the business is structured and operates.  In formulating a business charter, partners are asked to discuss questions such as:

  • What does ownership and the business mean to me?
  • What is each partner accountable for?
  • How much money to I expect to make and how much do I need to sustain my standard of living?
  • What are my long term and short term plans for the business?
  • What is my exit strategy?
  • How will each partner contribute to the business?
  • How will conflicts between partners be resolved?

As outlined in a previous post, a business partnership is like a marriage and simple investments of time such as developing a partnership charter can help you better understand your partners and can strengthening the partnership relationship which in turn will enhance your likelihood for success.  If you are considering forming a new business or would like to discuss legal issues facing your existing partnership, please contact our Business Law Group partner, David A. Closson at [email protected].

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