A partnership is a voluntary contract between two or more competent persons who decide to place their money, efforts, labour and skill, or some or all of that in lawful commerce or business along with the understanding that there shall be division of profits between them.

Basically, a partnership business is when two or more people decide to start a business together with the aim of dividing the profits generated between them. But the functioning of a partnership business is not as easy as it sounds. Though it is flexible and a less complex type of business structure when compared to other types, it has its own ups and downs.

Forming a partnership business may seem to be a favourable alternative given the advantages that come with it. It is a chance to make the most out of shared resources. But for any business to thrive there are some very important steps that ought to be taken in order to ensure that the business is a success and there is growth both financially and in the work environment. This is the same for a partnership business.

Therefore, here are some very important things you need to do before starting a partnership business.

Forming a partnership is a very big step and can make or break your business. The stakes in a partnership business are higher than they seem to be. Therefore, before taking any step towards forming a partnership business, reflect on why you need a partnership. Is it just because you need some more investment in your business or is it because you honestly have the ability to share a business and develop it collectively with someone you can trust.

It should be because it is beneficial to everyone involved and not just one person. That is what partnership means, sharing and division. So before starting a partnership business make sure that you do it for the right reasons.

After making up your mind about why you want to start a partnership business comes the most important step; Deciding who will be the partners. Now one thing that will always be there in a business is conflict, be it partnership or big corporations. Conflict is inevitable and sometimes it is good too. But most of the time it can create a very unhealthy work environment which will ultimately impact your business.

Therefore, make sure that whoever your partners are, they are the right fit for not only your business but for you as well. Not every opinion has to be similar but there should be shared values and some meeting points so that you can actually devote time towards the growth of your business rather than just worrying about how to get things right and align the work with your fellow partners.

Once the big questions are answered and you make the decision of starting a business in partnership, decide which type of partnership will best suit your business. Partnerships are of different types and the features of these types differ on the basis of the country and the legal system.

Therefore, before starting a business, do your research and understand the type of partnerships. Take the decision carefully because the liability, management and many other important parts of the day-to-day functioning of your business will depend on what type of partnership you adopt.

One thing that should be very strong and clear in a partnership business is communication. In the beginning of the business, during the working and at the dissolution, having clear cut conversations about important things makes the process a lot easier.

When starting a partnership business, clear your expectations about the business and the work environment very clearly. This involves having proper solution-oriented discussions on business strategy, roles and responsibilities of all the partners, division of profits, handling loss, recruitment, management and much more. Having the difficult conversations in the beginning makes the later process easier.

Always remember, have the important decisions and agreements in writing and do not rely on any kind of verbal agreement if you want a hassle-free business. The above-mentioned discussions should be a part of your partnership agreement which should be updated if any change is made in the business. This is the most crucial step which has to be taken when starting a partnership business.

Have a strong contract in place and leave no room for confusion and doubt especially when it comes to the subject matter of the business. Your partnership agreement must have all the important clauses in place.

Once the business is in place, what keeps it afloat is the management. In a partnership business where there is a huge possibility of difference of opinion it is advisable to outline the management related strategy well in advance and then take the further decisions accordingly. This also helps in maintaining well defined roles of every individual involved in the business.

Money is the driving factor of your business and it takes many forms. When it comes to managing a partnership, the money involved Is not just in terms of profit but is also in terms of managing the finances of the partnership business.

Therefore, before starting your partnership business it is always better to decide on what responsibility will be taken by each partner when it comes to handling the finances, salary of the employees, dealing with losses and the partner's share

Apart from the big decisions, make the small choices too. Try to figure out well in advance as to on what basis will your partnership company measure the performance of the partners, employees and the outcome of the business. This will help to evaluate the efforts and work while also keeping the business going.

This is a must have! As mentioned before, you need to have a strong written partnership deed in place before starting a partnership business. It is also mentioned above that conflicts in businesses are inevitable but what you can control is how the conflict can be resolved. Rather than going to the court and draining your business off time and money, a better resort is to opt for alternative dispute mechanisms such as negotiation, arbitration, mediation and conciliation. Having a dispute resolution clause in place makes a lot of difference and it will save you a lot of time and money and also from loss of reputation.

Partnership business seems to be very favourable in the beginning but one of the biggest disadvantages is that it does not have a separate legal existence. The existence of a partnership firm depends upon the partners and if not specifically mentioned in the deed it is dissolved on the death or in case of insolvency of one of the partners. Therefore, to have an exit strategy for partners planned out in the beginning itself is an innovative and well thought out step which if taken can help keep the business stay afloat and not make it completely dependent on the actions of the partners.

There can be many reasons why a partnership may be dissolved and it is always wise to have this at the back of your mind as to how will the partners handle this dissolution. This means that when planning to form a partnership, also decide how to handle the aftermath of it. For instance, if the partnership is dissolved and the business is sold in good will then how will that be divided and how will the whole sale take place. Having these answers in the beginning clears out a lot of ambiguity

Last but not the least, always have a lawyer draw up all the important contracts and legal documents and seek the correct legal advice to make sure that your business does not suffer. Legal battles can make or break business so make sure you have well-informed people on your side.