Partnerships are business structures that differ in several ways from corporations and sole proprietorships. Their organizational structure can be more difficult to formulate as a result. A corporation has a definitive organizational structure that assigns roles to people to manage and run the business. All roles within the corporation are clearly defined and the only variables are the people who are hired to fill those roles. A partnership is very different because these vital roles must be filled by the actual partners themselves, and how this is accomplished can mean the difference between the success and failure of the business.
The first and most important step of forming a successful partnership is to establish the division of labor and responsibilities of the partners. Partnerships, like any other business, have areas that must be effectively managed in order to succeed. These areas must be divided and managed according to the skills and abilities of each partner, and these roles should be decided upon and mapped out up front during the organizational formulation of the partnership. It is vital that each partner understands and accepts their role in the oversight and operation of the business early in the development phase in order to avoid conflict and potential issues later in the life of the partnership.
Depending on the type of business, each partnership will need to implement:
Each partner should take an active role in at least one of these areas depending on their skills and personalities. The most experienced and skilled individual should be selected to be the managing partner, and each other division should be managed by the most capable partner for that particular position.
It is important to note that experience, while desirable, need not be the only selection criteria for placing a particular partner in charge of a division. Many times, successful business managers succeed by having the proper personality and temperament for their position. Partners that are effective at motivating and inspiring employees to perform, regardless of their actual business experience, can be one of the most valuable tools any business can have.
A business will be successful based upon the commitment and abilities of the people who run it. Partnerships, although different than standard brick and mortar business operations, must adhere to the same principles in order to be effective and achieve growth. Organizing a partnership according to the various skills and abilities of the individual partners with an eye toward spreading the responsibilities evenly is a key element to establishing a prosperous and effective business.
We can help you with all of your business partnership legal document needs. Use our customizable partnership agreement template to create, download, and print your custom agreement in just minutes online.