HomeBusinessFundamentals Of Partnerships- Enter Into Partnership With Even & Reputed Persons

Fundamentals Of Partnerships- Enter Into Partnership With Even & Reputed Persons

Dear Readers, I want to share one incident with you and I do not want anybody to suffer the way my dear friend- Gopal ( name changed)- is suffering. Gopal entered reluctantly into a partnership with his co-brother two years ago to sell certain products. At that time, Gopal’s existing business was slightly down and he was looking for new avenues. Although, he was reluctant to join his co-brother because his late father had advised that it is not good idea to do any business with close relationship because somehow or other, if the business partnership breaks-down then even the relations get soured. He ignored this sagely advise and on the insistence of his wife and other close relative, he joined the business with his co-brother.

His co-brother used to show lot of respects and he was so overwhelmed by his behavior that my dear friend did not even insist for formal partnership deed and started working with him. Initially, Gopal did not feel comfortable with his new assignment because he had to interact with illiterate people to get the business but somehow he adjusted to the new environment. Fortunately, for Gopal, the positive results started coming and he also became interested to expand the business with his co-brother.

But destiny had some other plans in store for them. When you struggle to get the business then all the partners respect and motivate each other; the problem starts the day good results start coming in. Then one partner thinks – hey what the other guy is doing? Had I been alone, I would have also achieved the same results and what is his contribution.

So, the problems started cropping up and  the situation tuned ugly because of hostile attitude of co-brother of my friend. Gopal then decided that it is better to say good-bye to the association and start doing the business independently. He wanted business to be split in such a manner so that he can also get fruit of his hard work of two years but unfortunately this proposal was not acceptable to the co-brother of my friend. He wants that my friend should leave the particular trade, in which he deals and only then formal parting can be done. Is there any logic in this argument?

Moral of the story is that Do Not Enter Into Partnership With Your Relative Under Any Circumstances as separation, whenever it takes place is going to be very painful. Also take care of following points whenever you enter into business partnership with anybody:

  1. Always prepare partnership deed signed by both the partners and vetted by your lawyers and there should be minimum two reputed witnesses.
  2. Mention clearly in partnership deed- role of each partner i.e what each partner is supposed to do.
  3. Also mention minutely details of  common expenses which will be taken into account.
  4. How the profit and loss will be shared.
  5. In the event of break-down of trust between partners, how the partnership will be dissolved and how the business will be split.
  6. In the event of break-down of partnership, how the outstanding bills of vendors and loan liability, if any, would be settled.
  7. And the most important aspect of any partnership is that select a partner after giving due diligence to various factors like his/her age, behavior, tastes, character, education and family background. Your partner should be on same wave length and only then the partnership can flourish otherwise it will break very quickly.

I wish Gopal had taken my advise before plunging in this mess, for which he is repenting. He says he has committed Himalyan blunder. I do hope sufferings of Gopal will end soon and he will rise like Phoenix from this incident.

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