“We’re friends. Do I really need a contract/partnership agreement?”
This is by far one of the biggest questions I get from people thinking about a business
So for the sake of brevity, the short answer: Absolutely.
Well, having some type of agreement in place does a great job of heading off any potential
disagreements in the future. Here’s the thing: Most people don’t go into a business relationship
with someone they don’t like or don’t trust.
As a matter of fact, it’s quite the opposite.
But just like in a marriage on the personal side, things happen that can put a strain on the
situation, and partnership agreements establish a mutually agreed upon starting point that can
be an absolute lifesaver when inevitable disagreements or misunderstandings arise.
So as an example, a client of mine is in the process of partnering up with a business friend of
his in Houston. They’ve been friends for a couple of years, have worked together throughout
that entire time, and have absolutely had no problems in previous projects together.
He asked me if they needed an agreement and I said absolutely, if nothing else so that they
both know what the other is thinking/expecting of the partnership.
I know for a fact that my client is looking for this partnership as a way of expanding and adding
residual revenue to his coaching and consulting business.
So in the partnership in general, and the agreement in particular, we’re going to make sure that
those goals and ideas are accurately represented.
Conversely, I’m sure his potential partner has some ideas of what he’d like out of the
arrangement as well.
Let’s make sure THAT gets reflected in there as well!
Often times I find that the very act of writing down your thoughts, and putting them into an
agreement helps solidify the arrangement in each other’s mind.
And in the event that something unexpected comes up later on down the road (and that always
happens!), you’ll have a document that you can both look back on for easy reference.
And here’s the other thing: Nothing bad comes from having an agreement that you don’t
eventually use, right?
I mean think about it. If you put together an agreement, partnered with this person for the next
30 years, and never pulled it out at all, what exactly did you lose?
Maybe some time and some upfront money for getting things organized.
But in the more likely event that the opposite happens, what then? What happens when you
DO have a situation come up and you DON’T have a document that can help clarify the
A lot of things (and most of them are bad).
A lawsuit, arbitration and even disillusionment of the partnership, just to name a few.
So do yourself a favor: Put together a quick outline of what you’d like to see in the arrangement
and encourage your potential partner to do the same.
Take a quick look just to make sure everyone is on the same page, then hire a good attorney to
make it legally enforceable.
Then once you’ve got that nailed down, lock it in a safe and forget about it. (Seriously.)
Unless, of course, a situation arises when you need to pull it out, in which case you’ll be glad
you have it!