I am sure you have heard the saying “Necessary Evil”. But what is it?
Why do we even say it? A necessary evil is something you do not like, but which you know must exist or happen. So how or why does a necessary evil exist in restaurant partnerships?
Even before the benefits of being in business and before any restaurant partnerships, there was a friendship or a strong acquaintance that either knew each other or was introduced by someone. Somewhere there was two or three or more people who had some connection with the same profession or not. For some reason, these individuals were brought together for one reason and one reason only. It was to form a partnership to create a restaurant business where two or more individuals share ownership.
Remember, partnerships are all about relationships and in most cases one of the most influential ones of your life.
Another partnership is marriages. Marriages take commitment and time and effort. Mistakes made in marriage also may exist in a business.
So why are there problems and sometimes break ups in partnerships?
Here are the top four areas you need to look at before entering into a partnership.
1. Gathering Enough Information – knowing who you are getting into business with can save a lot of headaches down the road. Take time to do your homework. What you see is not always what you get. I have read, ” no great artist ever sees things as they are. If they did, they would cease to be an artist. Looking beyond the norm and peeling back the onion skin can reveal information abling you to make the right decision for you.
2. Taking assessments – can reveal the true person. Taking Adult Spiritual Gifts Test, Myers-Briggs Personality Test, Strengthsfinder Leadership Test will reveal what someone isn’t saying.
3. Not Speaking Up – and revealing what you want out of the partnership. Many people get into partnerships and never say anything they want out of the partnership. “It was a good idea at the time” isn’t a good enough reason to form a partnership. Thinking you can trust a person isn’t good enough reason either.
4. Saying “I do” before you have a written partnership agreement.
Trust, ultimately the deal breaker! ” Love all trust few” William Shakespeare.
I have had partnerships and because of different circumstances they ended. From each partnership, I’ve learned something different and understand how a partnership works. I’m hoping, with this information you can take it and apply it. Remember that there are allot of variables and some that can be worked out, and some that can’t be worked out.
Types of Partnerships
1. General Partnership – Each of the partners, will own and interest or share in the business. They also accept unlimited personal responsibility for all the businesses debts and obligations. This type of partnership can be formed simply and with fewer complications. There are even those that have been done by a handshake. I say stay away from handshake partnerships. Prepare a contract that list all the partners rights, obligations and liabilities.
2. Limited Partnership – This partnership has at least one general partner who will be personally responsible for the debts and obligations.
A limited partnership allows each partner to restrict personal liability to the amount of business investment. Each partner will participate the businesses profits and losses depending on their investment.
3. Limited Liability Partnerships – Tax advantages of the general partnership form, but offer some personal liability protection to the participants. Each partner isn’t held responsible for wrongful acts by any partner and debts or obligations of the business.