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].