There are any number of mistakes joint business owners will make during their work. While it’s impossible to avoid every mistake, it’s a good idea to take as many precautions as possible. Here are three common mistakes joint business owners should avoid making.
The wrong business structure can spell disaster for your business. In order to reduce personal liability for your business, you must structure your business properly. If you’re looking into sharing the ownership of your company, there are several types of entities from which you can choose. These include a General Partnership, Limited Partnership, Limited-Liability Company (LLC), S-Corp, C-Corp, Joint Venture, and Employer-Employee. Creating an LLC requires you to pay fees to register it in your state. There are several reasons why you might want to structure your business as any one of these entities, so it’s important to do your research as to which structure would be the best for your business. You can avoid making a big mistake by going through this research process.
Not Discussing Disagreements
Business partners rarely agree on every point, so it’s important to work through your vision of the company with proper communication. A lack of communication can easily lead to crisis for your business. It’s much easier to be completely honest with your business partners and discuss disagreements early than to let a grudge grow, fester, and lead to financial disaster.
One strategy that can be helpful in avoiding contention is building in a method of breaking ties when votes on a certain issue are even. If you designate a non-partner individual to break the tie, you will be able to keep contention to a minimum.
Failing to Plan
Failure to plan for success as well as failure is one huge mistake that all business owners should avoid. You can keep your business secure by talking to a professional financial planner and setting a preexisting structure for your business’ revenue. You should plan early the way that you plan to compensate those partners with skills essential to the business. Set expectations regarding the amount of work each employee and partner is expected to complete. You should also create a written document that details your plan in the event of the dissolution of your business. Planning each of these items will help you set expectations with your business partners and avoid unnecessary stress of the moment you might endure should you not have a plan available to you.
It’s hard to create and manage your own business, but with the right preparation, you can avoid a lot of problems. Begin now to avoid improper structuring, communication problems, and planning failure. Avoiding these three common mistakes will save you a world of hurt in the future.
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