Texas businesses that are looking to grow and carve a greater footprint in their market might want to explore various strategies to expand. One that carries with it great benefit and risk is adding a partner. Partners can be useful because they can look at the business with a different perspective, add financial freedom and have a different skill set than what is already in place.
Still, that does not automatically mean it is a guaranteed success. Partnerships bring with them organizational changes that need to be considered. Partnerships have specific laws in the Lone Star State and being aware of them from the start can help with knowing whether to move forward and to address issues as they arise.
Be aware of how a partnership works
Factors in the success of the partnership include a partner’s comportment, financial contributions, management, how payments are made and more. If there are already partners in place for a business, then a new partner will need to be approved.
Regarding the partner’s behavior, they are required by law to show duty of care and a duty of loyalty. The primary objective is to serve the partnership and understand the other partners’ interests. The business itself needs to come to the forefront. Many who are unaccustomed to working with others and are new to the partnership template could have trouble adapting to this new landscape. When joining a partnership or brining in a new partner, this should be considered.
Partners are required to approve the new individual joining the group. That includes credits and charges. Each partner bears responsibility for what they are contributing to the partnership. As part of that, they can derive their own share from any profits. They will also be responsible for losses.
Management can add a layer of complexity that all parties need to be aware of. People have different ways of handling problems, overseeing underlings, addressing clients and strategic decisions. Before the addition of a new partner is complete, considering whether the personalities mesh in an effective way can be key to making a successful transition.
Be prepared when adding a partner to a business
Whether it is a small, medium or large-scale business, adding a partner can be a positive decision for the direction of the business and its chance at advancement. Before jumping in, the prospective new partner and the existing partners need to be fully aware of how this can impact every aspect of the business and the potential positives and negatives.
Because this can be a make or break decision, having the proper legal agreements in place and knowing the ins and outs of the financial considerations is key. From the outset of running any business, it is always wise to have comprehensive business law guidance to prepare for every challenge that might arise.