Partnership Agreements Advice

[Rod Murray]

Good morning BPs,

I'm relatively new to REI and am starting a new venture with some of my military brothers in wholesaling and flipping. We're all very hungry, but want to ensure we start the right way administratively to avoid obstacles down the road. As we begin together, one of the processes, I'm a bit clueless on, is whether it is wise to doctor up a partnership agreement and if there are some specific language to include.

I'd greatly appreciate any information or insight anyone has with starting this grassroot venture with partners. 

[Doug Spence]

@Rod Murray I would do some research into partnerships in general. Some things to consider:

-Make sure you and your prospective partners have the same long-term goals with regard to your business. 

-Is everyone going to contribute the same amount of time to the business?

-Is everyone contributing the same amount of money to get it started? What happens when the business needs more money 6 months from now? 

-How does everyone get paid? Is it an even split? Salary-based or commission-based?

-How will the business end? What if someone doesn't want to do it anymore? Do they have to be bought out?

-Explicitly state who will be doing what in the business. 

-Make sure you're partnering with people who have complementary skills. For example, if three of you are all sales-focused, but no one is a numbers guy/gal or no one wants to do be in charge of the finance/accounting side, then you're probably going to have some friction. People should not all be bringing the same skillset.

-Just because you're friends with these folks, does not mean y'all will make good business partners. Realize the business could jeopardize your friendship if you don't address some of these potential issues!

Best of luck and keep us updated on your journey.