Prince Harry and Meghan Markle appear to be experiencing some challenges at the moment.
Marrying into the Royal Family is a difficult exercise. There are Crown Laws, the Queens’s Royal Family rules, and, of course (like any other couple), personal agreements to help ensure a happy life together.
Similarly, when you go into business with someone else, it does not matter what your legal structure is – you are, in fact, in a partnership.
Two entrepreneurs who go into business using a limited company often think the structure is a company, not a partnership. That is true from a legal point of view, but not from an operational point of view.
If you are in a business arrangement with another person, whether it be a friend, colleague, life-partner, sibling, parent or relation, you are in a partnership. The legal structure (company, trust, joint venture, etc.) does not matter when human behaviour comes in to play.
Humans have a great capacity to complicate simple things. This comes from our individual goals, values, conditioning, perceptions, comparisons and expectations.
The legal entity must comply with the laws of the land. The clauses in the formal agreement with your business partner must be followed.
In addition, businesses need a set of rules (or policies and procedures) to function effectively on a day-to-day basis. These rules are flexible and easily amended to deal with changing business conditions, but it’s the formal partnership/shareholders agreements that are relied on when disputes occur.
Regardless of your legal entity, you and your partner need formal agreements and operational rules. A formal partnership agreement should be drafted by a lawyer, and the policies and procedures by the partners, with input from a business or industry consultant if appropriate.
These rules should include:
- Have regular business meetings with agendas.
- Signed minutes of all meetings.
- Ensure financial reports are up to date.
- Off-site venues for dealing with conflicts between the partners.
- Bring in a referee when impasses are reached.
The last point is important. All games with rules need referees, so choose one (such as your accountant, business coach or mentor) who understands the rules and the playing field.
I help business partnerships flourish. Email me at firstname.lastname@example.org.