In any business partnership, it’s often hard to decipher who is responsible for which aspects of a business. With a free 50/50 partnership agreement template, this becomes much easier. In this post, we’ll show you how to define clear roles in joint ventures.
Outlining Your Objectives
You and any business partner you take on need to be on the same page. At a minimum, the two (or more) of you must have the same goals. You need to agree on the company’s short-term and long-term objectives. Your partnership agreement should help clarify these.
A 50/50 partnership agreement is an opportunity to clearly set out your joint venture. You should use the document to divide your profits and powers formally. These agreements only work when you have a single business partner. You can then split everything more evenly.
Your Company’s Governance and Voting Rights
If your joint venture is an incorporated business, you’ll likely have to answer to a board. You can work together to appoint representatives for each side of the partnership. This way, you’ll keep a fair and balanced structure, with half of the board advocating for you.
Alternatively, you may agree on each board member together. Packing a board of directors with people who advocate for you could easily lead to voting deadlocks. In a 50/50 partnership, you’ll usually have equal voting rights. You must ensure an adequate tie-break mechanism.
Tie-breaks can take many forms. You might appoint a chairperson who can act to make the final judgment on a matter. It may even help to give each partner weighted voting, depending on how the issue fits your specialty. You’ll have the final say on matters more relevant to you.
Choosing the Right Partner
Ideally, your business partner won’t be a carbon copy of your skills and experience. They should bring something new to the table. For example, they might have better financial acumen. They’ll possibly be responsible for fiscal oversight while you take a more managerial role.
Defining your roles starts with finding ways you fit each other’s skills. This approach will also make it easier to figure out your responsibilities. However, finding the right partner takes more than matching your skills. You must also trust one another to have the same company values.
For example, if transparency is important to one, it should be important to the other. You should have the same priorities for the business. Otherwise, you might fight about how to approach the firm’s long-term strategy. You need to trust each other to work well independently.
Writing Your Partnership Agreement
Once again, a partnership agreement is vital for setting out the company’s goals. The document can even effectively be a handbook for your joint venture. Either of you could refer back to it for clarification and direction. However, you’ll need an airtight and robust agreement.
Even if you know your business partner well, an agreement formalizes your mission together. As partners, there’s always the capacity for misunderstandings. A well-written agreement helps you sidestep this possibility and maybe even avoid it altogether.
When writing your agreement, you should default to online templates. These are usually free or low-cost, allowing you to avoid some legal fees. However, you might still want legal consultation to ensure your agreement is fair to both parties. Sticking closely to the template should help.
With this in mind, here are the essentials of any 50/50 agreement:
- Each partner’s details, including names and contact information
- The partnership’s start date, including the company’s location
- If necessary, a clearly defined chain of command
- The company’s governance structure, such as if it’s an LLC
- Information on how much each partner will invest in the business
- Details on how the partners will share profits (and losses)
- Robust conflict resolution mechanisms, such as arbitration
- An exit clause that allows one party to terminate the partnership
A reputable template site will already have many of these. You’ll just need to add your situation’s specifics.
Fairly Dividing Your Responsibilities
Even with a robust joint venture document, dividing roles can be challenging. New ad hoc duties can quickly arise, especially in a company’s early years.
However, it’s worth sticking to each partner’s specialty. For example, you might look at the firm’s legal side while your partner focuses on marketing. Ideally, you should both be involved in each of the company’s key components. Everyone must also have a (roughly) equal share of work.
Some joint ventures also rotate their leadership and duties every few years. If you plan to stay in business with your partner long-term, this approach is worth considering.
Conclusion
Every partnership involves splitting duties. The key here is to be honest about your skills while actively working to maintain a fair balance. However, you still need a legally binding 50/50 partnership agreement to formalize everything.
Guest writer
