If you are thinking about setting up in business, and the idea of going into business as a ‘partnership’ with a friend is appealing – make sure you’ve really thought it through!
A partnership is a proper legal partnership that’s registered with HMRC, and not just two friends working together. You may also be referring to setting up a ‘Limited Company’ but the point of this post is the same. Just because somebody is your best mate, it does not necessarily mean that you should be in business together!
A huge and disproportionate number of partnerships fall apart within the first year for a variety of reasons. In my experience, the most common cause is that one partner doesn’t show the same commitment as the other.
Let’s look at an example:
- Two men aged 25. One is single, and the other has a wife and two children.
- The single guy will have ample time to work but may not be motivated to earn as much money as his partner.
- The man with the family may be desperate to earn money but is unable to work as much due to family commitments.
Could this partnership work? Possibly – but it is likely be a rocky road.
My advice is to be cautious about who you get into bed with! You could start by employing your potential partner for a while and give them the chance to earn the right to own part of the business.
However you choose to progress, make sure you seek proper advice, and think about how you can come to a working arrangement that will suit both parties.
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