Consider a common scenario that plays out in the small business world: three friends who are all beer enthusiasts and amateur brewers get together one evening after months of talk, and they finally decide to go into business together and make plans for buying a bar Montana residents will come to. As loans are granted, supplies are purchased, and a warehouse is rented for the space, everything seems to be going along just fine. However, after opening, profits are sluggish, and tensions rise amongst the three business partners/friends. Over the course of a few years, the “friends” title may be completely erased when disputes have further torn the small business apart before it truly had a chance.
Seventy Percent of Small Businesses Fail Within 10 Years
The truth is, running a successful small business is extremely challenging, especially when you are still building a customer/client base in the first few years. 83 percent of small businesses struggle with cash flow, 42 percent of owners believe that there is an insufficient need for their product, and 23 percent say they do not have the right team. This all leads to 70 percent of small businesses closing up shop by or before their 10th year. Your business plan needs to be flawless in order to beat the odds, and part of that is creating a solid partnership agreement so that disputes can be avoided.
What Does a Partnership Agreement Need to Cover?
A partnership agreement is a binding contract between a business’s partners or co-owners. When you are buying a bar in Montana with partners, the following is a list of some of the most important aspects of what a partnership agreement should include:
- Taxes – Who is responsible for paying taxes at the end of the year?
- Benefits and Pay – This can define salaries, bonuses, life insurance, medical coverage, and other benefits.
- Business Details – When will the bar open, what is its expected revenue, and how many employees will need to be hired?
- Ownership and Personal Contributions – This outlines what percentage each partner owns in the company, their personal financial contributions in the form of cash or personal property, and voting rights when making business decisions.
- Withdraw from Business – An agreement may describe how a partner can leave the business or what happens if they die. For short-term partnerships, the duration of the partnership needs to be defined with a start and end date.
- Non-Compete Agreement – When a partner leaves the business, it is common practice for them to be legally restricted from competing against their former company. This is called a non-compete agreement—something that may apply to employees as well.
Considerations
For many people it’s a dream to open up a bar with their friends, which is why they may seek consulting a Montana buying a bar lawyer from Silverman Law Office, PLLC. After all, who doesn’t want to socialize with people they care about over food, alcohol, and fun? But as you rake in the money and then enjoy your success, you will have to take certain steps first to ensure that this is the outcome. The reality of opening up a bar with your friends may not line up with your fantasy perfectly right away, however, you’re more likely to achieve what you want if you have made preparations. Here are some things to consider before getting started.
Being in the Service Industry
Running a business, particularly in the service industry, can be really difficult, but it’s not impossible. There will be times when it’s fun, and other times when it’s stressful. You have to understand that despite someone being your closest friend and ally, they may or may not be the ideal people to get professionally involved with. As a Montana buying a bar lawyer may advise, just make sure that the people you recruit to be a part of your business are going to be responsible, reliable, and have the enthusiasm that will be relentless even during difficult times.
Business Relationships
Open communication between you and your friends as you open a bar is going to make you successful business partners. While it may initially seem like it could be easier to work with your friends instead of people you don’t know, keep in mind that the people you are close with may be afraid to bring issues to light in order to maintain the friendship. If there are disagreements or tensions that do arise, it helps to have a lawyer who can help settle the disputes so that you don’t lose your friendships and business. It is wise to prepare for the worst and hope for the best. The goal would be to maintain friendships, keep your business thriving, and have a form of conflict resolution if problems do develop.
Expected and Unexpected Costs
There are many costs that may come up when you are starting a new business. For instance, construction projects could take longer than you wanted, you may realize that the pipes need to be replaced immediately, and you may have to spend money related to obtaining an alcohol license. It helps to have a number in mind that you and your friends have all agreed upon for how much money that you are going to put into the business. But sometimes, launching a business comes along with costs that exceed your original amount. If any of your business partners are flexible in the budget, this can allow funds to go where they need to go if the unexpected happens.
A Montana Business Attorney Is Available to Help Today
There are so many factors to address when you are buying a bar in Montana, especially if you are opening up your business with one or more partners. To make sure that your financial interests are protected, have a Montana business lawyer representing you. Call Silverman Law Office, PLLC today to schedule a confidential consultation.v
If you are ready to go into business with your friends, or need other business related advice, reach out to a Montana buying a bar lawyer from Silverman Law Office, PLLC as soon as you can!
