Business Partnership Red Flags To Look For

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Starting a business partnership can be an exciting time. Sometimes that excitement may make you overlook obvious red flags.

It can be very beneficial to create a business partnership. Combining skills, knowledge, and experience along with a greater capacity to raise capital and gain tax benefits has its perks. However, certain actions or behaviors your partner displays may be signs that this partnership isn’t the right move.

Here are a few of the top red flags to look for when you’re in the process of establishing a business partnership:

1. They want to use their attorney for drafting all the contracts.

Their attorney then uses jargon that you don’t understand and pressures you to sign the agreement without letting your attorney review them first.

2. Your business partner is pushing to have more benefits go to them.

If the partnership isn’t fifty-fifty, this may be a red flag. If one of you isn’t bringing in equal value to the company, the one with more skills may be looking to obtain more benefits from the partnership. When partnerships are not equal they could present huge problems down the line.

3. There’s something about your potential business partner that is not trustworthy.

You’ll need to be in a professional relationship where you can trust your partner to run the company in the way that you and they agreed on. The stress of not being able to trust them may tear your company apart.

4. You don’t agree on the fundamentals of the business.

If you cannot agree on how you’d like the business to be run or what the goals of the company are, this may be a huge red flag. Finding a business partner who is in sync with you is rare, but a necessity for success.

5. You don’t have strong enough contracts in place.

If a big problem arises, a strong partnership agreement will present the proper guidelines to resolve it. Sometimes, even strong communication skills are not enough. Proper contracts can take the emotions out of handling complex and difficult disputes.

While your business partner may have a great moral compass, they are rarely selfless. Ultimately, it’s critical that all parties involved have their own representation. Finding an experienced attorney who has your best interests in mind will help start off a business relationship on the best footing.


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