The Partnership Charter: How To Start Out Right With Your New Business Partnership (or Fix The One You're In)

In rare cases, partners have buy-sell agreements in place that assign a value that no one contests. More commonly, however, someone disputes the price of the buyout, necessitating a costly valuation. Valuations often fail to settle the matter, though, because valuations are also frequently contested.

Not fulfilling one’s partners’ expectations is tantamount to breaking a trust: It creates cynicism and sours people to the whole idea of partnerships. Not surprisingly, “unmet expectations” was one of the prime reasons why a majority of people think that having partners is a bad idea, according to an Inc. magazine poll taken a few years ago.

Why Do You Want to Own a Business?

Why Do You Want to Have a Partner?

The essential elements of a successful partnership are a good fit between the partners’ personalities, similar values, the ability to be a team player, compatible goals and clear expectations, and mutual trust and respect.

They wanted transparency among themselves regarding their business lives and their personal and family finances. In addition to sharing financial goals for the business, they would jointly develop a goal for personal financial independence—that each would aspire to. They would not consider the goal satisfied until they all had achieved it. They wou

A Partnership Charter is not written in stone; it’s a living document that changes just as the individual partners and the partnership change. Partners must make a commitment to review it periodically and revise it as needed. The periodic reviews help ensure that partners continue to pay attention to any changes that are taking place before it’s to

Describing the operational roles in detail—essentially developing job descriptions—is key to working smoothly together for years to come.

TABLE 2.1 Comparison Between Partnership Agreements and Partnership Charters Partnership Agreement Partnership Charter Legally binding document; meant to create legal safeguards that compel certain conduct among the partners Not legally binding; meant to instill and help maintain a collaborative partner spirit Serves as a contract that creates part